AMMB completes Kurnia Insurans purchase

KUALA LUMPUR: AMMB Holdings Bhd has completed the acquisition of Kurnia Insurans (M) Bhd and the latter is now a unit of AMMB’s 51% subsidiary AmG Insurance Bhd.

AMMB said in a press release that the final cash purchase price paid by AmG was RM1.627bil, comprising the base price of RM1.55bil plus RM77mil for the increase in net assets (NA) of Kurnia from RM759mil (adjusted) as of June 30, 2011, to RM836mil as at the completion accounts date of June 30, 2012.

“The combined businesses of AmG and Kurnia emerge as the leading general insurer and the clear market leader in motor insurance, delivering significant competitive advantage,” said AMMB chairman Tan Sri Azman Hashim.

The purchase price was funded by AmG entirely with capital funds injected proportionately by its shareholders (AMMB and Insurance Australia Group Ltd). AMMB’s contribution included existing internal cash resources, supplemented by approximately RM500mil of senior debt issued in August 2012, it said.

AMMB added that that the inaugural Senior Note issuance in August to support AMMB’s recent acquisitions was “successful with a high level of institutional oversubscription for both the five- and seven-year issuances”.

Based on the completion NA of RM836mil, the final purchase price of RM1.627bil gives rise to an implied price-to-book multiple of 1.95 times, but with the benefit of any NA increase in Kurnia from July 1, 2012 accruing wholly to AmG.

“The combined business will underwrite around RM1.7bil of insurance premiums each year and we expect to improve pricing capability as well as diversify distribution to increase non-bancassurance contributions. The enlarged scale will enable us to realise cost synergies and operational efficiencies to achieve value accretion,” AmG chief executive officer Duncan Brain said in the statement.