PETALING JAYA: Plans by overseas insurers to list their Malaysian units in order to comply with foreign ownership rules here, appear to be off.
This comes as Singaporean insurance giant Great Eastern Holdings Ltd said that it has decided instead on the option of making a contribution to the B40 Health Protection Fund, which was announced in the recent Malaysian Budget.
Great Eastern’s move is widely seen as a precedent set for other foreign players to adopt as an alternative plan to comply with Bank Negara’s ruling of limiting foreign ownership of local insurers to 70%.
Overseas insurers with units here – some wholly-owned – were supposed to comply with the ruling by the middle of this year.
However, because of issues such as valuations and also reluctance on the part of the foreign insurers to reduce their stake in their local operations, listings – which is a way for them to pare down their stakes – were difficult to carry out, said a source.
“The solution that came after discussions was, for the insurers which could not comply with the 70% ruling to contribute a sum – relative to their business – towards a fund.
“This fund will provide healthcare and hospitalisation coverage to the B40, also known as the low-income group,” the source added.
In relation to this matter, Great Eastern issued a statement to the Singapore Stock Exchange last Friday, saying “as part of its corporate social responsibility efforts and in line with the objectives of the Malaysian authorities, it has decided on the option to make a contribution to the B40 Health Protection Fund, as announced by the Minister of Finance of Malaysia in his Budget Speech on Nov 2.”
Details are being finalised with the relevant parties in Malaysia, it added.
Earlier last week, Great Eastern had already said that it was discussing alternatives to allow its Malaysian unit – Great Eastern Life Assurance (M) Bhd – to adhere to foreign ownership rules and that these choices included making a certain contribution to a designated insurance development trust fund.
Finance Minister Lim Guan Eng, in his Budget 2019 speech, said that the government is expecting the fund, which will be managed by Bank Negara, to grow moving forward, with further contributions from other insurance companies.
Recall, the central bank has been asking foreign insurers to pare down their stakes in their Malaysian units to not more than 70%, as part of enforcing foreign ownership limits.
In June, the central bank was quoted as saying that it would “keep engaging insurers on their plans.”
Earlier in May, UK insurance firm Prudential plc had reportedly said that it was considering options like a listing of its Malaysian business and a potential purchaser of a small stake in its local unit, in order for it to cut down its holdings.
Japan’s Tokio Marine Holdings Inc had also been one of those reported to be working on plans to trim its stake in its local operations.
