IAG exits Malaysian life insurance joint venture

Insurance Australia Group (IAG) is exiting the life insurance part of its Malaysian joint venture, AmAssurance, while increasing its interest in the general insurance business by 19 per cent.

IAG will increase its interest to 49 per cent (the maximum allowed under Malaysia’s foreign investment rules) through a series of restructure steps, including a split of the existing AmAssurance composite insurance joint venture.

IAG’s 30 per cent interest will be split into general insurance and life insurance components before IAG sells its 30 per cent interest in the life insurance business.

IAG said in a media release that the move, which will take IAG’s overall investment in Malaysia to approximately $20 million, is part of IAG’s strategy “to pursue opportunities that strengthen its position in select Asian general insurance markets”.

IAG’s chief executive, Asia, Justin Breheny, said since the acquisition of the initial 30 per cent holding in AmAssurance in 2006, IAG has worked closely with its joint venture partner, AmBank Group, “to add value through the transfer of our specialist insurance skills and we are pleased with the performance of the business”.

“Following the increase in our equity participation, we look forward to continuing to work with our joint venture partner to grow the business and strengthen its underwriting performance,” Breheny said. “We’ll do this through the transfer of our specialist insurance skills.”

Breheny reported that the joint venture’s general insurance gross written premium experienced an increase of 15 per cent in local currency terms and IAG anticipates “continued growth in excess of 10 per cent for the next few years”.

The Malaysian restructure is expected to be completed in December this year, with regulatory approvals already in place. AmAssurance will change its name to AmG Insurance (AmG) and will retain usage rights on the AmAssurance brand.

The news follows IAG’s announcement at its recent annual general meeting that AmG intends to acquire interests in the general insurance business of the Malaysian Assurance Alliance Bhd (MAA), as well as a strategic stake in MAA’s Islamic insurance business. The acquisition is expected to be completed in 2009.