Malaysia’s AmGeneral up for potential US$1bn sale

April 16 2020 by Yvonne Lau

Malaysia’s AmGeneral Insurance is up for sale again and the deal could fetch US$1 billion, according to a report by Bloomberg.

AmGeneral’s owners, Insurance Australia Group (IAG) and Kuala Lumpur-based AMMB Holdings (AMMB), reignited the sale process in recent weeks. Private sources say that AMMB and IAG have requested interested parties to submit non-binding bids by the end of April.

Details have yet to be confirmed and discussions are still underway. It is understood that the terms of the transaction could change at any time, and AmGeneral still holds the cards to pull out of a deal and retain their stakes.

AmGeneral’s chief executive, Derek Roberts (pictured) told InsuranceAsia News (IAN) that the company declines to comment on shareholder matters and noted: “AmGeneral Insurance is focused on providing service to our two million customers at this very difficult and trying time.”

IAN has also reached out to IAG for comment.

In 2017, AMMB and IAG began discussions to sell AmGeneral. By October 2019, Allianz Malaysia had become the frontrunner to purchase Malaysia’s second-largest motor insurer but the transaction was hampered by Bank Negara Malaysia, the country’s central bank.

Market sources say that regulators were wary of the deal, as the two insurers combined would have been too big for the market. Japan’s MSIG was also in the running — they were the other shortlisted firm in last year’s negotiations.

IAG holds 49% of the Malaysian insurer, while AMMB has a controlling stake at 51%.

In recent years, IAG has reiterated its stance to refocus on its core Australia and New Zealand portfolios. After conducting a strategic review in mid-2018, the Australian player concluded that opportunities for growth in the region are limited and that they would sell all of their Asian subsidiaries. 

The same Bloomberg report notes that IAG is currently exploring options for their remaining businesses in Asia, “including divestments when appropriate.”

AmGeneral is valued at around US$800 million and is Malaysia’s second-largest motor insurer holding a 15% market share. For fiscal year 2019, the Malaysian general insurer saw around US$50.7 million of net income and US$347 million of gross written premiums (GWP).

Earlier this month, AmGeneral chief executive Derek Roberts spoke to IAN about the impact of Covid-19 for Malaysia’s general market. 

Roberts noted: “The industry should brace for a year with flat if not negative growth. Whilst it presents financial and liquidity hardship to the businesses – and to a certain extent GWP industry-wide – insurers need to come out with innovative solutions and proactively manage bad debts. Investment strategies and operational models will also be key.”

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