Guan Eng: Forcing foreign insurance companies to reduce their equity stake from 100% to 70% and divest it to local institutions will only benefit a few people. Photo by Bloomberg
KUALA LUMPUR: Finance Minister Lim Guan Eng has come out to say that Singapore insurer Great Eastern Life Assurance (Malaysia) Bhd is exempted from Bank Negara Malaysia’s (BNM) ruling on foreign ownership of local entities.
Great Eastern is granted the exemption as it has pledged a minimum RM2 billion contribution to a health scheme for the bottom 40% of the population (B40), Guan Eng was quoted by news portal Free Malaysia Today (FMT) as saying yesterday.
He added that other foreign insurance companies which contribute to the scheme will also be exempted from having to reduce their equity.
Guan Eng also said forcing foreign insurance companies to reduce their equity stake from 100% to 70% and divest it to local institutions will only benefit a few people.
“We prefer that ordinary people benefit; we are talking about millions and millions of ringgit.
“Either way, it goes to Malaysians but this way the B40 will get the benefit. The other way, very few will benefit, not even 40,” he said in the FMT report.
The B40 Health Protection Fund is an initiative piloted by the federal government in partnership with the private insurance industry.
Under the scheme, the government together with private insurers will provide free protection against the top four critical illnesses and up to 14 days of hospitalisation benefits starting in January this year.
The free protection against the top four critical illnesses will go up to a sum of RM8,000, while the hospitalisation income cover will be at RM50 per day or RM700 per year.
In his Budget 2019 speech on Nov 2 last year, Guan Eng had announced that Great Eastern had agreed to contribute the initial seed funding of RM2 billion to this fund, which will be managed by BNM.
Great Eastern’s parent Great Eastern Holdings Ltd later that month also made an announcement to the Singapore Exchange, reaffirming its commitment to support the B40 Health Protection Fund.
The group had also said then that details were being finalised with the relevant parties in Malaysia.
BNM had in 2017 provided the deadline of end-June 2018 for all insurers in Malaysia to comply with a 30% local shareholding guideline.
At the time, the media reported that insurers which had not reached the shareholding spread were looking to pare their stake amid the regulation, including through direct sale or initial public offerings. These included names like Tokio Marine Holdings plc and Prudential plc, the latter of which reportedly sought a share sale to raise US$700 million, according to Bloomberg.
Local funds like Kumpulan Wang Persaraan (Diperbadankan) and the Employees Provident Fund had also expressed interest to buy into certain insurers, including Great Eastern.
However, in October last year, it was reported that the government had reopened discussions about allowing foreign insurance companies to maintain full ownership of domestic insurers.