by Elffie Chew
Allianz Malaysia Bhd. and Mitsui Sumitomo Insurance Co. have been shortlisted to proceed to the next round of bidding for AmGeneral Insurance Bhd., in a deal that could value Malaysia’s second-biggest car insurer at about $800 million, people with knowledge of the matter said.
The two parties will need approval from the Malaysian central bank before formally starting detailed negotiations with AmGeneral’s owners, the people said, who asked not to be identified because the information is private. There’s no certainty the discussions will result in a transaction, according to the people.
Kuala Lumpur-listed AMMB Holdings Bhd. owns 51% of AmGeneral, while Insurance Australia Group Ltd. holds the remainder. A deal may include a bancassurance agreement, which would give the right to distribute insurance products through AMMB’s branch network, the people said.
The transaction could provide a road map for Prudential Plc and Tokio Marine Holdings Inc., which have been also considering cutting stakes in their Malaysian insurance units. The government has been seeking more local investment in the industry, though central bank governor Nor Shamsiah Mohd Yunus said in August that foreign insurers will be given flexibility and deadlines for compliance will be case-by-case.
Representatives for Allianz Malaysia and AMMB declined to comment. A spokesman for Mitsui Sumitomo Insurance, which is a unit of Tokyo-listed MS&AD Insurance Group Holdings Inc., also declined to comment. A spokeswoman for IAG said the company has nothing to disclose at this time.
AmGeneral is the second-biggest auto insurer in Malaysia with a market share of 15%, according to its website. It ranked fifth in the overall Malaysian general insurance market as of the first half of 2018.
The company has more than 4 million policyholders and a network of 7,000 agents and dealers marketing products under the AmAssurance and Kurnia brands. AmGeneral underwrote 1.52 billion ringgit ($365 million) of gross premiums and earned 255.5 million ringgit in net income in the financial year ended March, according to the insurer’s annual results.
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