Insurance Australia Group (IAG) appears to be shifting its growth strategy away from Asia after offloading three of its operations in the region for more than half a billion dollars.
The insurer confirmed today that it is selling its Thai and Indonesian businesses to Tokio Marine & Nichido Fire Insurance – part of Japan’s largest property and casualty insurance group – for AU$525 million (around SG$525.2 million).
“We believe Tokio Marine is an ideal owner given its experience in the region, and that this is a good outcome for the associated employees, customers and other stakeholders,” said IAG’s chief executive, Peter Harmer.
The firm is also selling its dominant stake in AAA Assurance Corp, based in Vietnam, to a different overseas buyer but it did not disclose the sale price for this deal. It still has minority stakes in insurance businesses in Malaysia and India but these remain under review.
The withdrawal from Asia comes after IAG launched a strategic review of its operations in the region, citing “limited” expansion opportunities.
Despite years of investments, the region has proved difficult for IAG to crack and the insurer posted an underwriting loss in Asia of AU$4.63 million in its fiscal first half of 2018.
A spokesperson for IAG said the asset sales would be completed by June 2019 and the profit from the sales would be treated as an “unusual item” and will therefore be excluded from its cash earnings and dividend calculation purposes.