Zurich Sells 40% Stake in MCIS Zurich Insurance for US$93 Million
April 24, 2014 by Ernesto Calucag, Hong Kong news editor: Ernesto.Calucag@ambest.com
KUALA LUMPUR, Malaysia – Zurich Insurance Group Ltd. has agreed to sell its entire 40% stake in the Malaysian insurer MCIS Zurich Insurance Bhd to its joint venture partner Koperasi MCIS Bhd for 304 million ringgit (US$93 million).
The deal, which is expected to be completed on May 5, 2014, is in fulfillment of Bank Negara Malaysia’s ruling to give up its dual holding of local licenses following acquisition of another local insurer Malaysian Assurance Alliance Bhd in 2011.
The country’s central bank and insurance regulator prohibits foreign insurance companies from owning substantial stake in more than one local insurance company.
The Swiss group acquired 100% of the total issued and paid-up share capital of the life and general insurer MAA for US$115 million and subsequently renamed it Zurich Insurance Malaysia Bhd in 2012 (Best’s News Service, June 20, 2011).
“The disposal of our stake in MCIS Zurich Insurance Bhd will satisfy the commitment made to Bank Negara Malaysia to rationalize our holding in two licenses, following our acquisition of Malaysian Assurance Alliance Bhd,” Geoff Riddell, Zurich’s Chairman for Asia Pacific, Middle East and Africa, said in a statement.
Riddell added the move will allow the group to focus exclusively on Zurich Insurance Malaysia, and help resolve any customer confusion on Zurich brand being carried, since the middle of 2012, by two separate companies.
“Through Zurich Insurance Malaysia, we are well-placed to capture growth in both the life and general insurance segments of the market and this move will further strengthen the growth prospects of these businesses over the long term,” he said in a statement.
Zurich Insurance Malaysia recently signed a memorandum of understanding with Bank of China to further explore bancassurance opportunities in the country.
The company, with 39 branches in Malaysia, currently relies on an agency distribution channel with about 5,400 tied life insurance agents and 3,000 multi-tied general insurance agents.
Trevor Bull, Zurich Insurance Malaysia chief executive officer, said in a statement the company aims to exceed the industry growth in both general and life insurance segments and grow its market share from the current 3% for life and 3.1% for general.
He said Zurich is aiming to be a leading life insurance provider in Malaysia within the next three to five years by offering more investment-linked products to supplement current offerings. For general insurance, Zurich plans to expand a portfolio that currently is 55% motor and motorcycle by growing its marine cargo and property segments.
Zurich Insurance Group is a multiline insurance provider with subsidiaries in Europe, North America, Latin America, Asia-Pacific, the Middle East, and other markets. It offers general insurance and life insurance products and services for individuals, small businesses, midsize and large companies, and multinational corporations.
The group is in the process of implementing a three-year strategic plan beginning this year in which it might dispose of poorly performing operations and concentrate on its strengths. The company also said it would increase operating earnings through careful underwriting and disciplined investment. Its three priority areas — corporate, commercial mid-market, and retail — will absorb 62% of its capital.
