No new policy on foreign insurer ownership

BY NG MIN SHEN / Pic By TMR

Bank Negara Malaysia (BNM) has prompted foreign insurers to fulfil their commitment to the domestic shareholding rule and reduce their stakes in their local units to 70% by June 2018.

Speaking to reporters at a press briefing in Kuala Lumpur yesterday, BNM governor Tan Sri Muhammad Ibrahim said the monetary authority has also “over emphasised that there is no new policy on foreign ownership”.

He said insurance companies owned by foreign shareholders had promised the central bank to comply with the requirement when applying for a licence to operate in Malaysia.

“Without this commitment, we would not give them the licence in the first place. So, after so many years of ample time, we’re asking them to honour their word,” he said.

Foreign insurers with fully owned local subsidiaries have until mid-year to reduce their stakes in the local units to 70% or less, as required by the central bank.

However, the possibility of a deadline extension or exemption remains, as there appears to be no sign of a firm deal yet on the part of any foreign player.

“Now they are in the middle of negotiating, so let that continue. We are not in any hurry to give any waiver.

“Currently there are quite a number of insurance companies in negotiation with domestic investors.

“We do not want to interrupt that decision by making any announcement on what will happen in June but that’s something we are looking at,” Muhammad added.

Singapore-based Great Eastern Holdings Ltd is said to be in talks with the Employees Provident Fund to sell a stake in its local arm, Great Eastern Life Assurance (M) Bhd.

UK-based Prudential plc’s Malaysian unit, Prudential Assurance Malaysia Bhd, is also reportedly in discussion with Retirement Fund Inc for a stake sale.

Other foreign insurers said to be mulling ways of complying with the domestic shareholding rule include Japan’s Tokio Marine Holdings Inc and US-listed property and casualty insurer Chubb Ltd.

Presently, only Allianz SE’s Allianz Malaysia Bhd and the Manufacturing Life Insurance Co’s Manulife Financial Corp, Manulife Holdings Bhd are traded on the local bourse.

Malaysia’s foreign ownership rules were liberalised in 2009, allowing foreign equity participation in insurance firms and takaful operators to increase from 49% to 70%