Zurich in talks to sell MCIS stake to Samlan

PETALING JAYA (June 10, 2013): Zurich Insurance Co Ltd is negotiating with South African financial services group Sanlam to sell its 40% stake in MCIS Zurich Insurance Bhd, people close to the matter said.

Source from (The Sun Daily): http://www.thesundaily.my/news/737448
Published: Jun 11, 2013

It is understood that Samlan is seriously considering Zurich's stake in MCIS Zurich to help expand its footprint in Malaysia.

According to sources, Zurich is desperate to strike a deal quickly as Bank Negara Malaysia (BNM) has given the Swiss financial group till the end of this month to separate itself from its troubled partnership with Koperasi MCIS Sdn Bhd.

"BNM has given Zurich till end of June to quit its joint venture with Koperasi MCIS," a source told SunBiz.

Zurich has to relinquish its 40% stake in MCIS Zurich Insurance Bhd after acquiring composite insurer, MAA Assurance Bhd for RM344 million on Sept 30 last year, as the regulator prohibits foreign companies from owning substantial stake in more than one insurance company in the country. MAA Assurance has since been renamed Zurich Insurance Malaysia Bhd.

"BNM has given Zurich an ultimatum to finalise the deal. Otherwise BNM will come down on Zurich over its dual holding in local insurance companies. It has been more than a year-and-a-half since Zurich bought MAA Assurance. BNM wants this issue of dual holding resolved soon," the source said.

Last September, Zurich Financial Services Group CEO Martin Senn had said the group was still in talks with various stakeholders for the proposed disposal of the MCIS Zurich stake within a grace period granted by BNM.

He had declined to elaborate on the duration of the grace period, only indicating that it was a private agreement between the central bank and Zurich.

Zurich has several options to consider. It may merge Zurich Insurance Malaysia with MCIS Zurich and retain management control of the enlarged entity, or sell MCIS Zurich and transfer its business and expertise to Zurich Insurance Malaysia.

Last month, the Sanlam Emerging Markets (SEM), a unit of the Sanlam Group which is tasked with expanding internationally, bought a 49% stake in Malaysian general insurer Pacific & Orient Insurance for RM270 million.

In a recent report, Robert Roux, chief of mergers and acquisitions at Sanlam, said the acquisition of Pacific & Orient Insurance was not the end game for the company in Malaysia.

"Obviously, we have done something in Malaysia. We don't think that's the end game in Malaysia," Roux was reported as saying.

Apparently, the plan is for Sanlam to expand into life and asset management in Malaysia.
Sanlam, the second-largest life insurer in South Africa, operates personal finance and insurance businesses across Africa, Europe, India, Australia and the US.

It has operations in eight African countries with majority stakes in countries such as Ghana, Kenya, Botswana and Namibia.