Zurich looking to sell 30% stake to comply with BNM rule

Zurich Insurance is considering its options to comply with Bank Negara’s requirement that foreign companies own only a maximum of 70% in local entities. (Reuters pic)

KUALA LUMPUR: Zurich Insurance Group AG is working with advisers to cut its stake in its Malaysian life insurance unit, people with knowledge of the matter said, joining a wave of foreign players planning over US$2 billion (RM7.8 billion) of such deals in the country.

The Swiss insurer is considering options, including a possible stake sale or domestic initial public offering of the business, which would help it comply with a 70% limit on foreign ownership, according to the sources.

The sale of a 30% stake in Zurich’s Malaysian life unit could fetch about US$100 million, one of the sources said, asking not to be identified because the information is private.

Overseas insurers, including Prudential Plc and Chubb Ltd, have been working with banks to explore ways to pare stakes in their Malaysian units, after the government decided to start enforcing ownership caps more strictly, Bloomberg News reported last year.

The country’s two biggest pension funds, which manage a combined US$203 billion, are pursuing talks to buy stakes in some of those businesses, people with knowledge of the matter said in October.

A representative for Zurich declined to comment.

Zurich has separated its general and life insurance businesses in Malaysia under separate legal entities, effective Jan 1 this year, to comply with local regulatory requirements, according to a press release on its website.

Last June, Bank Negara Malaysia ordered all foreign-owned insurance companies to pare down their stake in local entities to a maximum of 70%, giving them one year to comply.

Zurich Insurance Malaysia Bhd was renamed Zurich Life Insurance Malaysia Bhd, while its general insurance operations were transferred to newly-incorporated Zurich General Insurance Malaysia Bhd.

Zurich Insurance Malaysia earned net premiums of RM709.6 million in 2016, according to its latest available annual report.

 

Report: Foreign insurance firms want review of local ownership rule

Report: Insurance giants still looking for local buyers

EPF, PNB potential buyers as foreign insurance firms try to beat BNM deadline

Bank Negara imposes 30% minimum local ownership in insurance firms