Malayan Banking (Maybank) said on Monday it would buy the remaining 30.95% stake in Maybank Ageas Holdings from Belgian insurer Ageas for 4.8 billion ringgit ($1.18 billion), snaring full ownership of its Etiqa insurance business.
The deal will give Malaysia’s biggest lender full control of a business that it said has outgrown the insurance market in Malaysia and Singapore, and help it sell more insurance and Islamic insurance products through its banking network across its Southeast Asian markets.
Maybank Ageas Holdings owns Etiqa’s businesses in Malaysia and Singapore. They sell life and general insurance, as well as Islamic insurance, known as takaful.
Maybank owns 69.05% of Maybank Ageas Holdings. It expects to complete the acquisition by the end of the current quarter, subject to approval from the country’s central bank, Bank Negara Malaysia.
“We believe now is the right time for us to move into the next phase of growth” for Maybank Ageas Holdings and Etiqa, Maybank President and Group Chief Executive Officer Khairussaleh Ramli said at a media briefing on Monday.
The 4.83 billion ringgit purchase price is after adjustment for an 800 million ringgit dividend proposed to be paid by Maybank Ageas Holdings on completion. Ageas will be entitled to 248 million ringgit of the dividend, while 552 million ringgit will go to Maybank.
Maybank said it will fund the acquisition through internal and external sources.
The lender said the deal would immediately increase its profit attributable to shareholders, earnings per share and return on equity. It added that it expects the full ownership to help it manage capital more efficiently and support its existing dividend policy.
Etiqa’s insurance and takaful businesses in Malaysia grew at an annual rate of 7.3% over the past decade, compared with 4.6% for the industry, Khairussaleh said. Its life insurance and family takaful business grew 9.2%, against industry growth of 6.9%.
Maybank aims to lift Etiqa’s premium growth to a 15% compound annual rate and raise the contribution from bancassurance, or insurance sold through its bank channels, to 50% of total premiums by 2030, from about 40% now, Khairussaleh added.
Shares in Maybank were down 0.2% Monday afternoon, in line with the domestic benchmark index, while shares in Ageas rose 2.9% in early trade.
Reuters
