Global insurer AXA has reached an agreement with carrier Generali to sell its insurance operations in Malaysia, which includes its 49.99% holding in AXA Affin General Insurance (AAGI) and 49% holding in AXA Affin Life Insurance (AALI), for total cash proceeds of €140 million.
Generali has agreed to purchase the majority of the shares held by AXA and Affin in the two joint ventures, approximately 53% of AAGI (49.99% from AXA and 3% from Affin and minorities) and AALI (49% from AXA and 21% from Affin), respectively.
Additionally, Generali has filed an application to the local regulator to try to acquire the remaining shares of MPI Generali Insurans Berhad (MPI General) held by its Malaysian joint venture partner, MPHB Capital.
Generali has been active in the region since 2015, when it acquired a 49% stake in a P&C insurance subsidiary of Multi-Purpose Capital Holdings to create MPI General.
In total, the consideration for these transactions is €262 million. The agreements are subject to the approval of the Malaysian Minister of Finance and the Central Bank of Malaysia.
Following the transactions, Generali will operate in the country through two firms, one in the P&C arena and one in the Life sector.
Generali notes that within P&C, it intends to merge the businesses of MPI Generali with AAGI. Once completed Generali will hold 70% in both the Life and P&C entities, which will trade under the Generali name. The remaining 30% shareholding will be held by Affin Bank.
The transactions set to make Generali one of the leading insurers in the Malaysian marketplace, creating the number two P&C insurer by market share and entering the region’s life insurance market.
The insurer will also enter into an exclusive bancassurance agreement with Affin Bank for the sale of conventional P&C and Life solutions.
The acquisitions are expected to close in the second quarter of 2020, subject to closing conditions, including the receipt of regulatory approvals.
Jaime Anchústegui Melgarejo, Chief Executive Officer (CEO) International, Generali Group, said: “The transactions are fully aligned with Generali’s strategy to strengthen its leadership position in high potential markets, like Malaysia, which represents a very attractive opportunity as it is home to a growing middle-class population and with an insurance penetration rate that is still relatively low compared to other more mature markets in the Asian region.”
Rob Leonardi, Regional Officer, Generali Asia, added: “This is an exciting time for Generali in Malaysia and for our growth strategy in Asia. Over the last five years we have enjoyed working together with our business partner to reshape MPI Generali and now we can further optimise our strategic position, secure economies of scale for more efficient operations and deliver even greater value for our customers.
“We have ambitions to further transform and strengthen our business in this important market and look forward to working with our customers, employees, agents, partners and distributors on this journey.”