Malayan Banking Bhd (Maybank), Malaysia’s biggest bank, is preparing to spin off and list its Etiqa insurance arm on the local stock exchange. Etiqa, which operates in Malaysia, Singapore, the Philippines and Indonesia, is estimated to be worth at least $1 billion. It would have a bigger market value than insurance peer Syarikat Takaful Malaysia Bhd which is valued at about $700 million. Maybank’s insurance business is called Etiqa International Holdings Sdn Bhd. It owns 69 percent of Maybank Ageas Holdings Bhd while Ageas, the Brussels-based international insurer holds the remainder. Maybank Ageas owns various Etiqa units.
There isn’t much liquidity among existing listed insurers. The Etiqa franchise is quite strong, so it’s definitely a big attraction especially with Maybank as a bancassurance partner. If the stake is fully spun off, it would be an advantage to Maybank as it can reduce the capital requirements.
Maybank, Etiqa and Ageas are working with investment ks on the spin off. The listing will help Maybank unlock value and get it higher valuations. The planned listing comes as Malaysian state-linked fund management firm Permodalan Nasional Bhd, the biggest shareholder in Maybank, is seeking to restructure its holding companies in order to boost returns. Last year, Sime Darby Bhd, majority owned by Permodalan Nasional, spun off its plantation and property units and listed them on the local market.
Etiqa, which provides life and general insurance as well as family and general takaful, or Islamic insurance, products, reported record revenue of 6.2 billion ringgit ($1.6 billion) in 2017. Profit before tax rose 18.5 percent to 1 billion ringgit last year.
In March, Etiqa said it maintained its top position in Malaysia’s general insurance and general takaful segment with an 11.8 percent market share. It was ranked fourth in the life and family segment, with an 8.9 percent market share.
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