IAG raises general insurance stake in Malaysian joint venture
01 December 2008
Insurance Australia Group Limited (IAG), which recently announced a joint venture with the State Bank of India (SBI), has increased its stake in the general insurance business of AmAssurance, its joint venture in Malaysia, from 30 per cent to to 49 per cent.
IAG exited the life insurance part of the joint venture, in line with its strategy to pursue opportunities that strengthen its position in select Asian general insurance markets.
Under a restructuring of the Malaysian joint venture, the operations of Amassurance will be split into general insurance and life insurance components. IAG will sell its 30 per cent stake in the life insurance business and raise stake in the general insurance business to 49 per cent - the maximum allowed under Malaysian foreign investment rules.
This business will be renamed AmG Insurance (AmG) and will retain the right to use the AmAssurance brand, the company said.
"Since acquiring our initial 30 per cent holding in the Malaysian joint venture in 2006, we have worked closely with our joint venture partner, AmBank Group, to add value through the transfer of our specialist insurance skills, and we are pleased with the performance of the business,'' said IAG CEO Asia, Justin Breheny.
"During the 2008 financial year, the joint venture's general insurance gross written premium increased by 15 per cent in local currency terms, and we anticipate continued growth in excess of 10 per cent for the next few years,'' he said.
"Following the increase in our equity participation, we look forward to continuing to work with our joint venture partner to grow the business and strengthen its underwriting performance. We'll do this through further penetration of the joint venture's distribution network and diversification of its product portfolio," he added.
The restructuring has received regulatory approvals and the process is likely to be completed in December. IAG expects the restructuring to result in a net profit after tax of approximately A$35 million.