Royal & Sun Alliance deemed a good fit for AXA

  • Business
  • Monday, 22 Oct 2007

Royal & Sun Alliance Insurance Malaysia may be the next company the AXA group is acquiring a stake in because it is perceived as a good fit by industry observers. 

With the ongoing merger and acquisitions (M&As) taking place in the insurance industry, it may not come as a surprise if the second largest European insurer decides to proceed with its plans. 

Observers said the move, would to a certain extent, depend on the outcome of the group's bid for the Malaysian Assurance Alliance Bhd (MAA Assurance). 

Two years ago the group had received the green light from Bank Negara to commence negotiations for a stake in the British-based insurer (Royal & Sun Alliance Insurance) but due to some reasons it had decided to defer that. 

They told StarBiz now that Boustead Holdings has increased its stake to 80% in Royal & Sun Alliance, there is rekindled interest for the AXA group to gradually take a stake in the general insurer.  

Boustead recently increased its stake in Royal & Sun Alliance from 35% to 80%, with Felda Marketing Sdn Bhd owning the rest. Boustead owns about 23.4% of AFFIN HOLDINGS BHD, which owns Affin Bank Bhd. It also has interests in AXA Affin General Insurance through Affin Holdings. 

“Over the next three to five years, AXA's acquisitions plans are in Asia and Malaysia is one of the key markets for the group to expand its operations. The main criteria for any of the group's acquisitions strategies is that the targeted company must be “well managed”. 

“Royal & Sun Alliance is a well-run company and have the same business culture as AXA and is a good fit for the group's general insurance. It also will help the group garner a larger market share in the general sector and enhance its distribution channels,'' a source added.  

AXA's general insurance operations are mainly in motor, property, health and marine insurance businesses and if the acquisition of Royal & Sun Alliance materialised, it would add synergy to the group and fortify its general insurance operations in Malaysia, the source added. AXA is among the leading players in terms of profitability in the general insurance business in Malaysia,. 

AXA Asia Pacific Holdings Ltd regional chief executive (Life) Mark Pearson told a media briefing in Hong Kong recently that AXA was keen to make inroads into Asia as it had a low penetration level and a high savings rate. 

Pearson had said that AXA-AFFIN Life Insurance Bhd would consider acquiring other insurance firms if its bid for MAA Assurance failed.  

AXA Asia Pacific Holdings Ltd together with AFFIN Holdings Bhd is one of the four short listed potential partners that are vying for a stake in MAA Assurance. Apart from life insurance, AXA also wants to acquire a stake in MAA Assurance's general business. 

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