Generali raises stake in Malaysian insurance business

by LYDIA NATHAN / pic by TMR FILE 

ITALY’S Generali Asia is set to become the second-largest property and casualty (P&C) insurer in Malaysia following its proposed purchase of a 53% stake in AXA Affin General Insurance (AAGI), 70% shareholding in AXA Affin Life Insurance (AALI) and 49% stake in MPI Generali Insurans Bhd for a cash consideration of RM1.29 billion.

The MPI Generali Insurans stake will be acquired from its joint venture partner, Multi-Purpose Capital Holdings Bhd (MPCHB) and thus become a wholly owned unit of Generali.

The stakes in AAGI and AALI will be acquired from AXA group and Affin Bank Bhd respectively.

The transactions are subject to the approval of the Ministry of Finance and Bank Negara Malaysia.

AXA in a separate statement noted the transactions are to be completed by the second quarter of 2022.

Generali has been active in Malaysia since 2015, when it acquired a 49% stake in MPCHB, a P&C insurance subsidiary of MPCHB to create MPI Generali.

Generali Group CEO International Jaime Anchústegui Melgarejo said the transactions are fully aligned with its strategy to strengthen its leadership position in high potential markets.

“Malaysia 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,” he stated in a release yesterday.

The general insurance businesses of Generali will be merged into a single company with the Italian company then holding a 70% in both the life and P&C businesses in Malaysia and Affin group the remaining 30% respectively.

Generali will enter into an exclusive bancassurance agreement with Affin Bank for the sale of conventional P&C and life insurance products under the Generali brand name.

Generali Asia regional officer Rob Leonardi said the group will seek to optimise its strategic position, secure economies of scale for more efficient operations and deliver even greater value for 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,” he said.

Affin Bank Group CEO Datuk Wan Razly Abdullah Wan Ali said the entry of Generali will enable Affin to monetise part of its investments in the insurance businesses, and the proceeds raised will be reallocated to fund business growth in its core banking business.

“From this merger, there will be enhanced brand equity for Affin via ownership of a larger scale general insurer in Malaysia which is expected to be the second-biggest general insurance provider with an estimated gross written premium of more than RM2 billion and total assets of more than RM6 billion,” he said.