This article first appeared in The Edge Financial Daily on February 19, 2020
KUALA LUMPUR: It appears that not only has the asset management arm of Affin Bank Bhd caught the interest of rivals, its life and general insurance business is also being courted.
Singapore’s Great Eastern Holdings Ltd and Italy’s Assicurazioni Generali SpA are eyeing the life and general insurance business owned by Affin Bank and France’s AXA SA, Bloomberg reported yesterday.
Affin and AXA’s collaboration in Malaysia comprises AXA Affin General Insurance Bhd and AXA Affin Life Insurance Bhd.
According to the wire, AXA and Affin are looking for options on the ventures, which could fetch a combined US$650 million (RM2.7 billion) or US$500 million for the general insurance arm and up to US$150 million for the loss-making life insurance unit.
It reported that Great Eastern — majority owned by Oversea-Chinese Banking Corp — and Generali are working with respective advisors on potential offers, quoting unidentified sources.
The first round of bidding is expected to conclude by end-March, although deliberations are ongoing and the companies may decide not to proceed with an offer, Bloomberg reported the sources as saying.
Affin owns 49.95% in AXA Affin General Insurance, while AXA owns 49.99%. The Malaysian bank also controls 51% in AXA Affin Life Insurance, with the rest owned by AXA.
AXA Affin Life Insurance net loss narrowed to RM8.1 million in the financial year ended Dec 31, 2018 (FY18), from RM17.7 million a year ago. This was despite a 5.43% decline in gross premiums to RM463.4 million, from RM490 million previously.
Meanwhile AXA Affin General Insurance is dubbed as one of the top medical and health insurers in Malaysia, with 5,000 agents nationwide.
The company underwrote RM1.44 billion (US$347 million) in gross earned premiums and posted a net income of RM100 million in FY18, according to its latest annual report.
Apart from a strong general insurance business, Affin Bank also boasts the third largest asset management arm in Malaysia under its wholly-owned unit Affin Hwang Asset Management Bhd, which has over RM56 billion worth of assets under management as at end last year.
On Feb 3, The Edge Malaysia weekly reported that financial institutions are seeking to acquire Affin Hwang, quoting sources. At least one — Malayan Banking Bhd — has expressed interest, although it is still at the preliminary stages, one source was reported as saying.
In terms of earnings, Affin’s AM business contributed RM74.4 million to Affin Bank in the nine months ended Sept 30, 2019 — a slight increase from RM70.4 million in the previous corresponding period.
Amid the interests towards Affin Bank’s two business arms, the listed entity is still trading at 0.39 times price-to-book ratio — which is the lowest relative to its listed peers.
Affin Bank’s largest shareholder is Armed Forces Fund Board (LTAT) with 35.33% stake. The bank also has Boustead Holdings Bhd — the listed outfit of LTAT — as a substantial shareholder with 20.72% stake.
In the nine months ended Sept 30, 2019, Affin Bank’s net profit rose 1.76% to RM365.66 million from RM359.34 million in the same period last year. Revenue slid 1.52% to RM1.44 billion from RM1.47 billion.
Affin Bank last closed one sen or 0.54% lower at RM1.84, giving the banking group a market capitalisation of RM3.65 billion. The stock has retreated over 19% in the past 12 months.