Thursday, 12 April 2012

AmG Insurance to buy Kurnia Insurans for RM1.55 billion

KUALA LUMPUR (April 12): AMMB HOLDINGS BHD []'s 51%-subsidiary AmG Insurance Bhd (AmG) is acquiring the entire interest in Kurnia Insurans (Malaysia) Bhd (Kurnia) for RM1.55 billion.

In a statement on Thursday, AMMB said AmG had entered into a conditional sale and purchase agreement with KURNIA ASIA BHD [] (KAB), which wholly-owns Kurnia.

AMMB and AmG chairman Tan Sri Azman Hashim said the acquisition will position the group to deliver on AmG's strategic objective of being among the top three domestic general insurers.

"The combined businesses of AmG and Kurnia will emerge as the largest domestic general insurer and the market leader in motor insurance," he said.

AMMB said the purchase price of RM1.55 billion was arrived after taking into consideration a valuation by AmG of Kurnia's business, the net profits and net assets of Kurnia, and potential synergies.

"The cash purchase price for the proposed acquisition will be funded by AmG entirely with capital funds to be injected proportionally by its shareholders (51% by AMMB and 49% by Insurance Australia Group Ltd (IAG) [AMMB's strategic partner in AmG]," it said.

AMMB said that on a combined basis, AmG-Kurnia will emerged as the No 1 general insurer (about 13% market share) and motor insurer (about 22% market share) in Malaysia by gross written premium.

AMMB group managing director Ashok Ramamurthy said there are substantive cost synergies and supply chain operational efficiencies from the enlarged scale, which would benefit its customers and business partners.

"Additionally, the three million policyholders of Kurnia is a ready pool of customers for cross-selling opportunities of AmBank Group's other financial products and services, such as banking and fund management, through our extensive distribution footprint," he said.

AMMB said that post acquisition, both the AmAssurance and Kurnia brands would continue to be used, and most of the integration process is expected to occur over a period of two years after the acquisition, within which the value accretion from the proposed acquisition would be realised.

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