CIMB Selling Off Insurance Arm

 

The sale of CIMB Group Bhd and British insurer Aviva plc's Malaysian insurance joint venture (JV) could fetch up to US$1.2 billion (RM3.67 billion). CIMB's 51 per cent controlling stake and Aviva's 49 per cent stake is said to be worth US$500 million each.

It was learnt that Aviva's 49 per cent stake would cost another US$200 million as it includes a potential strategic alliance agreement between the winning bidder and CIMB on top of the stake sales.

The deal would be the second biggest transaction after ING sold its Malaysian life insurance unit to AIA recently for US$1.68 billion.

The strategic alliance will allow the winner to distribute bancassurance products through CIMB Group's subsidiaries across the region. The JV partners sell life insurance and takaful products via CIMB Aviva Assurance Bhd and CIMB Aviva Takaful.
CIMB has become one of the top regional banking groups in the region with an impressive network. It has a full banking business across Malaysia, Indonesia, Singapore and Thailand.

Recently, the group completed the acquisition of Philippines Bank Of Commerce (BoC), which expanded CIMB's retail network to 1,239 full branches, maintaining its largest branch footprint in Asean.

CIMB Group is in nine out of 10 Asean nations - Malaysia, Indonesia, Thailand, Singapore, the Philippines, Cambodia, Brunei, Vietnam and Myanmar. CIMB wants to raise its overseas revenue contribution to 60 per cent by 2015, and selling insurance products would expand its retail-based fee income substantially.

In 2007, when Aviva paid RM500 million for its 49 per cent stake in the JV, it included a long-term bancassurance agreements with CIMB.

However, the JV failed to live to its potential. It is believed that the sale of CIMB Aviva JV is a two-horse race between Manulife Financial Corp and Sun Life Financial Inc. Other suitors that have shown interest are Prudential, AIA and Khazanah Nasional, which made a late bid.