Assicurazioni Generali has agreed to buy rival Axa's insurance assets in Malaysia for a consideration of RM 1,290m (€262m) in a key strategic push into the region.
The deal announced today (22 June) will see Axa sell its stake of 49.99% in Axa Affin General Insurance and its 49% of Axa Affin Life Insurance.
The acquisitions will position Generali as one of the top insurers in the Malaysian market, creating the second P&C insurer by market share and entering the country's life insurance sector.
We have ambitions to further transform and strengthen our business in this important market ."
Generali will acquire a 70% stake in Axa Affin Life Insurance joint venture (49% from AXA and 21% from Affin) and approximately a 53% stake in AXA Affin General Insurance joint venture (49.99% from Axa and 3% from Affin and minorities).
Affin's eventual shareholding in the merged company will be reduced to 30% when the deal is complete.
Axa said on 22 June it expected to close the transaction by the second quarter of 2022 and that it will receive around €140m from the two sales.
The sale is part of French insurer Axa's efforts to streamline its business in a restructuring launched by Chief Executive Thomas Buberl, a process which includes selling assets in some countries and markets to boost returns.
Generali said in a statement on 22 June that "the transactions transform Generali's activities in Malaysia" as the merger would create "one of Malaysia's leading general insurance operations".
The total consideration for the combined transactions is of RM 1,290m(€262m) subject to closing adjustments.
As a result of the transactions, Generali will operate in Malaysia through two companies - one in the 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 P&C entities, which will trade under the Generali name. Affin Bank will hold the remaining 30%.
Generali will enter into an exclusive bancassurance agreement with Affin Bank for the sale of conventional P&C and Life insurance products. Established in 1975, Affin Bank is the tenth largest bank in the country with over 110 branches catering to both retail and corporate customers. Its activities focus on commercial, Islamic and investment banking services, money broking, asset management and underwriting of Life and General insurance business.
Generali, AXA, Affin Bank and MPHB Capital are working together to obtain the required regulatory approvals. Generali will commence the necessary integration planning to develop an organisation that leverages the skills, experience and expertise of all the staff of the combined business. The expected completion date of the acquisition is in the second quarter of 2022.
Jaime Anchústegui Melgarejo, CEO international, Generali Group, said: "The transactions are fully aligned with Generali's strategy to strengthen its leadership position in high potential markets, like Malaysia, which represents a very 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."
Rob Leonardi, regional officer, Generali Asia said: "This is an exciting time for Generali in Malaysia and for our growth strategy in Asia. Over the last five years we have enjoyed working together with our business partner to reshape MPI Generali and now we can further optimise our strategic position, secure economies of scale for more efficient operations and deliver even greater value for our customers. 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."
Generali has been active in Malaysia since 2015, when it acquired a 49% stake in Multi-Purpose Insurans Berhad - a P&C insurance subsidiary of Multi-Purpose Capital Holdings to create MPI Generali.
Axa Affin General Insurance is among the largest general insurance players in Malaysia, with an extensive distribution network of over 5,000 active agents across the country. The company closed 2020 with €287m of gross written premiums while AXA Affin Life Insurance, founded in 2006, earned an Annual Premium Equivalent of €24m.
Axa Affin Life Insurance is a "market leading innovator in helping individuals manage risk and achieve their financial goals", Generali said.