PETALING JAYA: Italian insurer Generali has signed an agreement to buy France’s AXA insurance operations in Malaysia and the shares held by Affin Bank Bhd in the joint ventures – including 53% of AXA Affin General Insurance Bhd [AAGI] (49.99% from AXA and 3% from Affin and minorities); and AXA Affin Life Insurance Bhd [AALI] (49% from AXA and 21% from Affin).
Generali is also acquiring the remaining 51% stake in MPI Generali Insurans Bhd held by its joint-venture partner Multi-Purpose Capital Holdings Bhd, a wholly owned subsidiary of MPHB Capital Bhd, to increase its current 49% stake to 100%. The transactions are subject to the approvals of the Finance Minister and Bank Negara Malaysia (BNM).
The total consideration for the combined transactions is RM1.29 billion (€262 million) subject to closing adjustments, Generali said in a statement today.
As a result of the transactions, Generali will operate in Malaysia through two companies – one in the property & casualty (P&C) segment and the other in the life segment. In the P&C segment, Generali plans to merge the businesses of MPI Generali with AXA Affin General Insurance. Once the transactions are completed, Generali will hold 70% in both the life and the P&C entities, which will trade under the Generali name. Affin Bank will hold the remaining 30%.
The acquisitions will position Generali as one of the leading insurers in the Malaysian market – creating the second largest P&C insurer by market share and entering the country’s life insurance segment.
Generali will enter into an exclusive bancassurance agreement with Affin Bank for the sale of conventional P&C and life insurance products.
Generali, AXA, Affin Bank and MPHB Capital are working together to obtain the regulatory approvals. Generali will commence the integration planning to develop an organisation that leverages the skills, experience and expertise of all the staff of the combined business. The acquisition is expected to be completed in the second quarter of 2022.
“The transactions are fully aligned with Generali’s strategy to strengthen its leadership position in high potential markets like Malaysia, which represents an 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,” Generali Group CEO International Jaime Anchústegui Melgarejo said.
“By pooling Affin’s bancassurance channel with Generali’s expertise in life and general insurance, our customers will have access to a more extensive range of products and services. 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,” said Generali Asia regional officer Rob Leonardi.
Generali has been active in Malaysia since 2015, when it acquired a 49% stake in Multi-Purpose Insurans Bhd – a P&C insurance subsidiary of Multi-Purpose Capital Holdings, to create MPI Generali.
AAGI ranks fifth in the Malaysian P&C insurance market with a 7.9% market share. AALI ranks 11th in the Malaysian life insurance market.
Affin Bank Bhd and Generali Asia NV today agreed to form a new joint venture that will encompass Affin’s general and life insurance businesses and Generali’s general insurance business in Malaysia.
The two parties entered into an implementation agreement whereny Affin has agreed to dispose of 21% stake in AALI and 2.95% stake in AAGI to Generali. Affin has also agreed for AAGI to acquire certain assets and liabilities of MPI Generali Insurans Bhd via a business transfer (AAGI merger) to create an enlarged company (MergeCo). The transactions are subject to the approvals of BNM and other relevant authorities/parties.
The general insurance business of AAGI and MPIG will be merged under AAGI (the new enlarged MergeCo) via a business transfer arrangement. Affin currently owns 51% in AALI and 49.95% in AAGI. Affin’s eventual shareholding in both AALI and AAGI (MergeCo) will be reduced to 30% upon completion of the transaction.
The entry of Generali as the new major shareholder of AALI and AAGI (MergeCo) will enable Affin to monetise part of its investments in the insurance businesses, the proceeds of which will be reallocated to fund business growth in its core banking business. From the AAGI 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 providers with an estimated GWP of more than RM2 billion and total assets of more than RM6 billion.
Affin believes that with the new partnership with Generali – being one of the largest global insurance groups – both insurance entities will be poised to scale greater heights.
Affin president & group CEO Datuk Wan Razly Abdullah Wan Ali said it is excited to be taking MergerCo into second position in the general insurance business arena.
