AMMB and Liberty sign SPA for sale of RM2.29 bil AmGeneral Insurance, sign 20-year bancassurance partnership

KUALA LUMPUR (July 1): After almost a year of preparation, AMMB Holdings Bhd (Ambank) 51% unit AmGeneral Holdings Bhd (AGHB) has signed a sale and purchase agreement (SPA) with Liberty Insurance Bhd (LIB) on the sale of its 100% stake in AmGeneral Insurance Bhd (AGIB).

This follows regulatory approval received from the Minister of Finance (MoF) on June 28 for the transaction, the AMMB said in a statement.

The sale, worth RM2.29 billion, will be split between RM1.35 billion in cash and RM939 million for a 30% stake in LIB, which includes sunk non-cumulative convertible preferred shares ( INCPS) to be determined later.

Meanwhile, AGHB’s 49% shareholder, IAG International Pty Ltd, is exiting the business, via a Selective Capital Reduction (SCR) which values ​​the 49% stake at RM1.076 billion.

Accordingly, AMMB through AGHB will hold 30% effective control in both LIB and AGIB.

In a statement, the AMMB said that as part of the transaction, it will enter into “a new 20-year bancassurance partnership” for the distribution of general insurance products.

In short, bancassurance is a device that allows an insurance company to sell its products to a bank’s customers.

The operations of AGIB and LIB will be formally merged at a later date, which will be announced in due course, he said.

AMMB Group CEO, Datuk Sulaiman Mohd Tahir, said LIB’s presence is essential “not only to drive our general insurance business towards sustained growth, but also to ensure that we continue to be the leader in this segment”.

“Following this sale and subsequent merger of operations, we will be able to leverage our complementary strengths to accelerate the growth of the local insurance market, and together we seek to become the most Malaysia’s largest motor insurer and leading property and casualty insurer,” Sulaiman said.

Based in Kuala Lumpur, LIB employs around 450 people in six regional offices and 24 branches across Malaysia. The company distributes its personal, commercial and other product lines through multiple channels, including a workforce of 2,000 agents, as well as franchises, car dealerships and our banca partners.

AMMB shares rose eight sen or 2.14% to close at RM3.81 on Friday (July 1), giving it a market capitalization of RM12.63 billion.