KUALA LUMPUR/HONG KONG/MELBOURNE (Nov 23): Owners of AmGeneral Insurance Bhd, Malaysia’s top auto insurer, are exploring a potential sale that could value the company at about US$800 million, according to people with knowledge of the matter.
Kuala Lumpur-listed AMMB Holdings Bhd, which owns 51% of the insurer, picked JPMorgan Chase & Co to advise on a possible deal, said the people, who asked not to be identified because the process is private. Insurance Australia Group Ltd, owner of the remaining stake, is working with Deutsche Bank AG, the people said.
Overseas firms including Prudential Plc and Japan’s Tokio Marine Holdings Inc have been seeking to cut stakes in their Malaysian insurance units, as the central bank seeks to encourage more local investment in the industry. Insurance companies have been involved in US$3.8 billion of acquisitions in Southeast Asia this year, a nearly sevenfold increase from the same period in 2016, data compiled by Bloomberg show.
AMMB and IAG have not yet sought Malaysian central bank approval to begin negotiations with potential buyers, according to one of the people. Deliberations on a sale of AmGeneral are at an early stage, and they may not result in a deal, the people said.
Representative for AMMB, Deutsche Bank and JPMorgan declined to comment.
A spokeswoman for IAG referred Bloomberg queries to comments made by the company’s chief executive officer last month and declined to comment further. CEO Peter Harmer said at the firm’s Oct 19 annual general meeting that IAG hadn’t been able to find the right circumstances to boost its investments in markets, including Malaysia.
AmGeneral is the biggest auto insurer in Malaysia with a market share of 15.8%, AMMB’s annual report shows. It ranks second in the overall Malaysian general insurance market, based on net premiums in 2016.
The company has more than four million policyholders and a network of 7,000 agents and dealers marketing products under the AmAssurance and Kurnia brands. AmGeneral underwrote 1.6 billion ringgit (US$388 million) of gross premiums and earned 190.8 million ringgit in net income in the financial year ended March, according to the insurer’s annual results.