Axa Asia Pacific said yesterday it would spend $22 million on a half share
in Malaysian life insurer Tahan Insurance.
The deal allows Axa AP to dip its toes in the $5.7 billion Malaysian
life insurance market by gaining a licence to operate there.
"We understand this to be the primary reason for the deal, since
the Malaysian regulator is no longer handing out new licences," Goldman
Sachs JBWere analysts said in a note to clients.
"We see this as a smart move, because the Malaysian life insurance
market is one of the largest and fastest growing insurance markets in
South-East Asia."
Axa AP has formed a joint venture company with Malaysian financial services
group Affin Holdings Berhad to buy Tahan and is working on a distribution
agreement with Affin Bank.
The deal was flagged to investors in August although no purchase price
was given at that time.
It is a small one for Axa AP, which has total capital of more than $1
billion, but analysts said the Malaysian market was attractive for life
insurers.
"It is estimated that only 38 per cent of Malaysians have life insurance
cover, which is low compared to more developed markets such as Singapore,
South Korea and Japan - where the percentage of population insured is
87 per cent or more," Macquarie Research analysts told clients.
However, they pointed out that Tahan was a small player, with a share
of less than 1 per cent compared to the largest player, Great Eastern,
which accounts for more than half of the Malaysian market.
In the Australian life insurance market, all eyes are on the upcoming
sale of PrefSure, which is owned by South African company Liberty Group.
A data room is expected to open for prospective buyers within days and
Tower Group is among about 10 companies keen to have a look.
Analysts said other potential buyers included Zurich, MetLife and the
Commonwealth Bank. PrefSure claims to have more than 100,000 policy holders
and more than $200 million in assets.
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