THE BUZZ
AMMB Holdings Berhad has received Bank Negara Malaysia’s approval to commence negotiations with Friends Life FPL Limit to repurchase the 30% equity interest held by Friends Life in AmLife Insurance and AmFamily Takaful.
OUR TAKE
An expected move. Given the capital and economic challenges faced by European insurance companies, we are not surprised by UK-listed life insurer and pension firm Friends Provident plc’s latest announcement to dispose of its 30% stake in AmLife Insurance and AmFamily Takaful back to AMMB Group. This follows a similar proposed sale of ING’s insurance business in Malaysia to AIA. Note that Friends Life had purchased a 30% stake in AmLife for RM170m in 2008 and since then, the AmLife Assurance fund’s asset size has grown by nearly 62%, averaging 15% p.a.
Marginal impact. The life insurance business contributes to 2.5% of group earnings and hence the additional 30% stake repurchased from Friends Life is only expected to enhance group earnings by a very marginal 1.1%. With the strategic partnership with Friends Life having been in place for only four years, we believe that the latter’s exit is not likely to cause a significant fallout in the group’s life insurance business, as various key reengineering efforts and infrastructure enhancements are already in place.
AMMB Holdings Berhad has received Bank Negara Malaysia’s approval to commence negotiations with Friends Life FPL Limit to repurchase the 30% equity interest held by Friends Life in AmLife Insurance and AmFamily Takaful.
OUR TAKE
An expected move. Given the capital and economic challenges faced by European insurance companies, we are not surprised by UK-listed life insurer and pension firm Friends Provident plc’s latest announcement to dispose of its 30% stake in AmLife Insurance and AmFamily Takaful back to AMMB Group. This follows a similar proposed sale of ING’s insurance business in Malaysia to AIA. Note that Friends Life had purchased a 30% stake in AmLife for RM170m in 2008 and since then, the AmLife Assurance fund’s asset size has grown by nearly 62%, averaging 15% p.a.
Marginal impact. The life insurance business contributes to 2.5% of group earnings and hence the additional 30% stake repurchased from Friends Life is only expected to enhance group earnings by a very marginal 1.1%. With the strategic partnership with Friends Life having been in place for only four years, we believe that the latter’s exit is not likely to cause a significant fallout in the group’s life insurance business, as various key reengineering efforts and infrastructure enhancements are already in place.
Source: OSK
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