Etiqa Plans To List

Malayan Banking Berhad (Maybank) is looking to unlock value by listing its insurance arm as part of its major shareholder Permodalan Nasional Bhd’s (PNB) plan to sweat the assets of its investments, say sources. 

The listing, if it takes place, will add to the large number of companies going public on Bursa Malaysia this year, as the market has turned more receptive to new issuances following a lull. The bank’s investment banking arm, Maybank Investment Bank Bhd, and Credit Suisse are said to be working on the deal.

A Maybank spokesperson when contacted said the bank does not comment on market speculation. Maybank’s insurance business is parked under Etiqa International Holdings Sdn Bhd, which owns 69.05% of Maybank Ageas Holdings Bhd.

Maybank Ageas, in turn, wholly owns six insurance subsidiaries, including Etiqa Insurance Bhd, Etiqa Takaful Bhd and Etiqa Insurance Pte Ltd. The Etiqa group offers life and general insurance in Malaysia, Singapore and the Philippines.

The current biggest listed insurance company on Bursa Malaysia is Syarikat Takaful Malaysia Bhd, majority-owned by Lembaga Tabung Haji and which has a market capitalisation of over RM3bil.

Sources said Etiqa, once listed, will have a market capitalisation exceeding Syarikat Takaful.While the insurance business is relatively small within the Maybank group, Etiqa is the largest insurance company in Malaysia. But its presence is largely in Malaysia for now.

According to sources, Etiqa plans to be a major regional player using Maybank’s extensive network of branches in Asean. Its Singapore business unit has been working with the bank there and has been able to grow the insurance business there in the past three years.

Even in Malaysia, there are opportunities to expand, given that insurance penetration is still low. For the financial year ended Dec 31, 2016, Maybank Ageas made a record pre-tax profit of RM810.3mil, which was over a one-third rise from the RM604.4mil achieved in the previous corresponding year.

Its total assets stand at RM31.9bil, while total combined gross premium and contribution was at RM5.3bil, investment income at RM1.1bil and gross benefits and claims payout at RM4bil.

Etiqa Takaful continues to command a market share of 49% in general takaful and 16.3% in family takaful new business.

Its bancassurance channel, meanwhile, has a market share of 18% in regular premium sales, while its online business has a 89.7% market share in general insurance and general takaful online sales, the company said in a March statement.

PNB, the country’s largest fund-management company, has embarked on an exercise to unlock value in its companies, encouraged by the substantial rise in market value of its six main listed entities.

The fund’s group chairman, Tan Sri Abdul Wahid Omar, had reportedly said that it wanted to see PNB investee companies going back to their core activities. He had previously alluded to more restructuring taking place to create more “pure play” companies within the PNB stable, following the demerger plans for Sime Darby and UMW Holdings Bhd.

Yesterday, property companies in the PNB stable announced a significant merger and acquisition exercise. The listed SP Setia Bhd is proposing to acquire the unlisted I&P Group Sdn Bhd at between RM3.5bil and RM3.75bil. The deal will transform SP Setia into the largest owner of prime land in the country.