AMMB sells general, motor insurance arm to Liberty Insurance for RM2.3b

Upon completion of the sale, AMMB and Liberty Mutual will hold a 30% and a 70% equity stake in LIB and AGIB respectively

by SHAHEERA AZNAM SHAH / Pic by TMR FILE PIX

AMMB Holdings Bhd has proposed to dispose of its motor and general insurance arm, AmGeneral Insurance Bhd (AGIB), to Liberty Insurance Bhd (LIB) for RM2.3 billion.

AMMB said its 51%-owned subsidiary, AmGeneral Holdings Bhd (AGHB), has entered into an implementation agreement with LIB to sell its entire stake in AGIB, which will be satisfied via a combination of cash and shares in LIB.

“The proposed disposal is subject to regulatory approvals. Contingent on receiving the said approvals, AGHB and LIB will, inter alia, execute a share purchase agreement under which LIB will acquire a 100% equity stake in AGIB from AGHB for approximately RM2.3 billion,” AMMB noted in a statement on the local bourse on Monday.

Upon completion of the disposal, AMMB and Liberty Mutual Insurance Co (Liberty Mutual), the parent company of LIB, will hold a 30% and a 70% equity stake in LIB and AGIB respectively.

“AMMB’s share of proceeds from the proposed disposal will be satisfied via a combination of cash and shares, which will result in AMMB holding a 30% interest in the LIB and AGIB businesses,”

“AMMB will be accounting for the proposed disposal as a disposal of a subsidiary and, subsequently, will account for the 30% retained interest in LIB and AGIB as an associate undertaking,” it said.

AMMB CEO Datuk Sulaiman Mohd Tahir (picture) said following the disposal, the merger between AGIB and LIB is expected to create the largest motor insurer and the second-largest property and casualty insurer in the market with an estimated pro forma premium base of RM2.3 billion in 2022 based on 2020 data.

“AMMB is pleased to join forces with a global leader in insurance like Liberty Mutual. We are confident this proposed transaction will set the stage for us to thrive and compete better, strengthening our positioning in the Malaysian insurance market.

“The synergies that we will be able to leverage on will benefit our shareholders, customers, employees and all other stakeholders.

“As an enlarged entity, we will also have the resources to speed up product development and accelerate the adoption of digital innovation,” he said.

The proposed disposal will also see AMMB entering into a 20-year new bancassurance partnership, the group said.

In a separate statement, Liberty Mutual global retail markets east president and COO Matt Nickerson stated the bancassurance partnership with AMMB will involve a distribution of general insurance products.

“As part of the transaction, the prospective merged entity will enter into an exclusive 20-year bancassurance partnership with AMMB to distribute general insurance products.

“Expanding and investing in international insurance markets is instrumental in our aspiration to become a leading global property and casualty insurance company.

“Liberty Mutual’s mission to help people embrace today and confidently pursue tomorrow is well aligned with AMMB’s mission to help individuals and businesses in Malaysia grow and win together,” Nickerson said.

He added that upon combining Liberty Mutual’s global capabilities with AGIB’s leading market share in motor and a growing business in additional product lines, both parties are expected to create a topgrade insurance operation.

Liberty Mutual is in the middle of applying for regulatory approval for the disposal deal.

AGIB is currently 51%-owned by AmBank Group and 49%-owned by Insurance Australia Group Ltd.