KUALA LUMPUR: MAA Holdings Bhd (MAAH) has received the nod from Ministry of Finance (MoF) to dispose of its 100% stake in Malaysian Assurance Alliance Bhd (MAAB) to Zurich Insurance Company Ltd for RM344 million.
MAAH told Bursa Malaysia yesterday the proposed disposal is still subject to the execution of definitive agreements, and further details will be announced in due course.
The RM344 million price tag compares with MAAH’s own market capitalisation of about RM420 million.
MAAH shares closed 11 sen higher at RM1.38 yesterday, which is 10% lower than its 52-week high of RM1.55 on April 8. The counter gained some 89% year-to-date.
According to companies commission’s data, MAAB, which underwrites life and general insurance, made a net profit of RM21.33 million on the back of RM1.46 billion revenue in FY08. It had assets of over RM6.73 billion and liabilities of RM6.54 billion as at Dec 31, 2008.
It is worth to note that MAAB has been up for sale since at least four years ago, joining the fray of mergers and acquisition activities in the industry. M&A activities have increased since the relaxation of foreign shareholding in local insurers.
Based on its filings to Bursa Malaysia, MAAH has entered into negotiations with many parties with regards to the disposal of MAAB’s businesses.
This include AmG Insurance Bhd, AXA Asia Pacific Holdings Ltd, Affin Holdings Bhd, Allianz Insurance Management Asia Pacific Pte Ltd, Nippon Life Insurance Company and Kurnia Asia Bhd.
MAAB had announced its intention to sell its general insurance business to AmG Insurance Bhd last year for an indicative disposal consideration of up to RM180 million, but the proposal fell through when they discontinued talks last December.
The RM180 million was lower than the original indicative value of RM254.83 million in April 2009.
In April this year, MAAH submitted a fresh application to Bank Negara Malaysia to seek the approval of the MoF for the proposed disposal of a number of its subsidiaries to Zurich, including MAAB.
The other subsidiaries were Multioto Services Sdn Bhd, MAAGNET Systems Sdn Bhd, Malaysian Alliance Property Services Sdn Bhd and MAAGNET-SSMS Sdn Bhd.
MAAH recently announced its net profit almost quadrupled to RM16.23 million or 5.33 sen per share in the first quarter ended March 31 from only RM4.78 million the previous corresponding quarter. Revenue was 10% lower at RM488.59 million from RM540.07 million.