Malaysian insurers AmGeneral Insurance Bhd and Allianz Malaysia Bhd may have ended talks about a possible merger.

According to a report by Edge Markets, citing people familiar with the matter, the two insurers may have discontinued plans for a merger, due to regulatory disapproval.

“One of the reasons is that Bank Negara Malaysia believes the two insurers combined would be too big for the market, especially when they both command a large share of the same market segment,” said one of the sources quoted by the report.

In January, it was reported that AmGeneral and Allianz had begun merger talks, and both parties had applied for the approval of Bank Negara Malaysia.

AmGeneral Insurance is 51% owned by the AmBank Group, one of the largest banking groups in Malaysia. The group also has a life insurance joint venture, AmMetLife, with US-based MetLife. However, the general insurance business generates more revenue, the report said.

Even if the deal with Allianz falls apart, observers have noted that AmGeneral remains an attractive asset for AmBank Group. This is due to its 15% share of the Malaysian motor insurance market. It was able to bring in MYR101 million (US$24.12 million) in profits to the group for the year ended March 31.