Great Eastern Holdings has announced a significant acquisition in the insurance sector, with plans to acquire 100% of the shares in AmMetLife Insurance Berhad (AML) and 100% of the shares in AmMetLife Takaful Berhad (AMT) from AMMB Holdings.
This strategic move comes with exclusive twenty-year bancassurance and bancatakaful agreements for the distribution of life insurance and family takaful products in Malaysia. Here’s a closer look at the details and implications of this acquisition.
The Acquisition Deal
Great Eastern Holdings (GEH), a prominent player in the insurance industry, is set to acquire the entire ownership of AmMetLife Insurance Berhad and AmMetLife Takaful Berhad. This acquisition is a significant move that further strengthens GEH’s presence in the Southeast Asian insurance market. The consideration for this acquisition, including the exclusive distribution partnership, is approximately RM1,121 million or the equivalent of $325 million.
Exclusive Distribution Partnership
One of the key aspects of this deal is the exclusive twenty-year distribution partnership that accompanies the acquisition. GEH will collaborate with AMMB Holdings and its subsidiaries, including AmBank Islamic Berhad, to distribute life insurance and family takaful products in Malaysia. This strategic partnership expands GEH’s reach and distribution channels in the Malaysian market.
Aggregate Net Asset Value
As of March 31, the aggregate net asset value of AmMetLife Insurance Berhad and AmMetLife Takaful Berhad was approximately RM819 million. This financial snapshot provides insight into the financial health of the acquired entities. The acquisition will likely have implications on GEH’s overall financial portfolio and market position in Malaysia.
GEH’s Expansion Strategy
Great Eastern Holdings has a history of strategic acquisitions and partnerships to expand its footprint in the insurance industry. In 2019, GEH acquired PT QBE General Insurance Indonesia, strengthening its presence in the Indonesian market. Additionally, in 2006, GEH established Great Eastern Life Assurance (China) Company (GELC) in a joint venture with Chongqing Land Properties Group. However, the landscape of this joint venture evolved over the years.
Evolution of Joint Ventures
In 2012, GEH divested a 25% stake in GECL to Chongqing City Construction Investment (Group) Co., reflecting the dynamic nature of joint ventures in the insurance sector. In 2015, Evergrande entered the picture by acquiring a 50% stake in Great Eastern Life Assurance (China), leading to the entity’s renaming as Evergrande Life Insurance.
Evergrande’s Troubles and the Insurance Business
Evergrande’s financial troubles and debt issues had a direct impact on its insurance business. In September of this year, the National Administration of Financial Regulation in China approved the transfer of Evergrande Life Insurance to Haigang Life Insurance. This move came as Evergrande Life Insurance reported insolvency, with substantial losses in 2021 and total liabilities exceeding total assets.
Implications and Future Prospects
Great Eastern Holdings’ acquisition of AMMB’s insurance arm represents a strategic move to expand its presence in Malaysia and strengthen its insurance offerings. The exclusive distribution partnership adds an additional layer of synergy to this acquisition.
As the insurance landscape continues to evolve, this acquisition positions GEH for growth and a more prominent role in the Malaysian market. It will be interesting to watch how this strategic move unfolds and its impact on GEH’s regional presence and financial performance in the coming years.