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.

Malaysian Insurance Industry 2013

Malaysian analysts has projected a high single-digit growth in premium income for the insurance industry next year. The growth would be supported by the growing affluence amongst the middle-income population, healthy consumer spending power and an under-penetrated market, compared to that of a developed nation.

In addition, innovative products through channels like bancassurance and agencies have enhanced the profits from life insurance. Industry's growth will continue to outpace the gross domestic product growth as the government has pledged to increase insurance protection of the low-income household segment.

Asian region countries are facing pressure to elevate their respective minimum wage and should Malaysia follow this trend, it should be able to channel more disposable income to purchases of insurance policies.

Takaful segment is expected to continue registering a high double-digit growth of around 20 per cent through 2014. Insurers increasingly identified takaful as a high-growth profitable segment and with a penetration rate of 13 per cent for family takaful, it indicates the latent potential for takaful versus conventional life insurance's 55 per cent.

It added the takaful industry is still at an early stage of development with growth expected to outpace the growth of conventional insurance. The growth is expected to be supported by the increasing awareness to diversify takaful from being a niche segment catering to Muslim communities, enhanced regulatory reforms to support takaful infrastructure and identifying common grounds or workable solutions for issues faced by Shariah committees and industry leaders.

Factors such as stronger participation and liquidity in sukuk and Shariah-compliant instruments to support investment income and strengthening takaful and retakaful capacity will enhance takaful growth.

Thailand Automobile Industry

The Federation of Thai Industries (FTI) has revealed that a record 256,581 automobiles were produced in the country last month - the highest since car production began in 1961, reports the Thai News Agency. This represents a year-on-year increase of 982.85% and a 1.75% increase from the month before. FTI spokesman Surapong Paisitpattanapong cited high demand after last year’s massive floods as a contributing factor.

161,768 of this record production number were sold in the country and the rest were exported, said Surapong. The spokesman also revealed that in the first 11 months of this year, Thailand’s auto production for domestic and export markets totalled 1.29 million and 941,351 units respectively.

Total Thai vehicle production is projected to hit some 2.45 million units by the end of the year, 2.5 million units next year and three million units by 2017, allowing the Kingdom to become one of the ten largest car producing nations in the world, added Surapong.

Takaful Iklas Medical Plan

Takaful Ikhlas Sdn Bhd aims to achieve RM66mil in contribution from its health insurance products for the financial year 2012/2013. This compares with RM41mil in the financial year 2011/2012.
Since its launch, the ChoicePlus health insurance products have more than 14,000 policy holders from about 19 corporations

“Our collaboration with the National Heart Institute (IJN) and several other hospitals, will act as a catalyst for our efforts in achieving the target through our ChoicePlus product,” executive vice president Wan Mohd Fadzlullah Wan Abdullah said.

He was speaking after signing a memorandum of understanding (MoU) with IJN here yesterday. Under the MoU, IJN will function as a strategic partner and panel hospital, for the medical card offered by Takaful Ikhlas under the ChoicePlus brand.

ChoicePlus, introduced in September, is a medical aid card targeting all employers in Malaysia for the purpose of looking after their employees' health and welfare. At the same time, the card helps the employers manage the escalation in their medical costs.

In the collaboration, IJN will work with Takaful Ikhlas in its promotion activities, including giving health talks and health check-ups. Cardiovascular disease was the foremost cause of death globally, including in Malaysia, and was expected to increase further with an aging population, an increase in diabetes cases and a unhealthy life-style.

New BAFIA Act

The new Islamic banking and Takaful Acts, currently undergoing legislative process towards its enactment, will be effective next year, says Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz.

It has already gone for first and second reading in Parliament, she said, adding that it would be called the Islamic Financial Services Act and Islamic Finance and Takaful Act.

"Right now the industry is covered by the Banking and Financial Institutions Act 1989 (BAFIA) and the Islamic Financial Services Act which will come into operations...we expect next year, " she told reporters on the sidelines of the final day of the Eighth World Islamic Economic Forum (WIEF) here today.

Earlier, in her keynote address, she said this new legal framework would not only streamline the legal requirements across sectors but would also ensure that the law was reflective of the nature and features of Shariah contracts.

It would also ensure that the degree of regulation would commensurate the level of risks that Islamic financial institutions, markets and products pose to the overall financial system, Zeti said.

"The greater clarity on the legal and prudential requirements underpinned by Shariah principles will enable participants of the Islamic financial system to align to their practices and expectations accordingly when undertaking Islamic financial business and transactions," she said.

The central bank Governor said while Islamic finance practitioners and scholars continue to draw from the source of fiqh muamalat to create new and innovative instruments, the legal framework needed to be further strengthened to ensure alignment with new market developments.

This is to ensure that it continued to lend certainty and predictability to innovative products and financial transactions, she said.

Furthermore, as Islamic financial activities venture beyond national boundaries, the development of legal frameworks that was facilitative of cross borders transactions was pivotal, she added.

Move Up The Chain

Here are 7 ways to help rising stars make sure they aren't shot down or overlooked when it comes to being singled out as a future leader...

BE RECEPTIVE
Can you take to feedback and constructive criticism? "You will get staff members who are really vocal about what they have achieved or have done, but when you give them feedback, they reject it," says Busine. That's the mangers cue to reject you as a potential leader of the future...

SOLVE PROBLEMS, DON'T CREATE THEM
Great employees show initiative rather than just sit back and hope someone else will solve the issue for them or give them a step up. Ask your boss if you can become involved in new projects, get onto training programmes and be exposed to how management works.

BE AGILE AND OPEN
Do you have an aptitude for learning new skills, technology and programmes? "Managers should be looking for learning agility here," says Busine. "They want people who can learn quickly and adapt to new environments."

KNOW WHAT TALENT MEANS
Try to get a full understand of what talent actually means to the organisation you are working for. Ask your boss or the HR department to give you information on what is valued and what skills they believe the company will need in the future.

AIM FOR BALANCE
Getting results is great, but not if it is at the expense of the values of the organisation you are working for. "An employee may get results, but they could be leaving a trail of disaster," warns Busine.

THERE'S NO ‘I' IN TEAM
If you want to be a future leader, then you need to show you are a team player; share your success, give credit to others, be inclusive and don't blame other people for failures. You will be demonstrating to your boss that are good at building relationships and it will also help to build your good reputation too.

BE COMPLEX
Can you deal with complex issues and problems? You may know that you can, but you need to demonstrate that to your manager if you want to move up the chain.

Sony & Panasonic Is Dying

Ratings agency Fitch cut the debt ratings of Japanese consumer electronics makers Sony Corp and Panasonic Corp to “junk” status, citing weakness in their businesses. The downgrades deal a further blow to the floundering Japanese tech giants which have been facing weak demand and fierce competition from Apple Inc and Samsung Electronics.

A strong yen and bumps in China, where growth has slowed and Japanese goods have been targeted in sometimes violent protests recently, have also weighed on their earnings. The credit rating agency today downgraded Sony by three notches to BB-minus from BBB minus, saying meaningful recovery will be slow.

“Fitch believes that continuing weakness in the home entertainment and sound and mobile products and communications segments will offset the relatively stable music and pictures segments and improvement in the devices segment which makes semiconductors and components,” it said in a statement.

In a separate statement, Fitch cut Panasonic to BB from BBB-minus, a two-notch downgrade, citing weakened competitiveness in its TVs and display panels as well as weak cash generation from its operations.

Last month, Panasonic cut its forecast and warned it will lose close to US$10 billion (RM30.61 billion) in the year to March, as it writes off billions of yen in tax-deferred assets and goodwill related to its mobile phone, solar panel and small lithium battery businesses.

Ahead of its earnings revision, Panasonic won US$7.6 billion in loan commitments in October from banks including Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group, a funding backstop it says will help it avoid having to seek capital from credit markets.

Rival Sony made a small operating profit in the July-September quarter, helped by the sale of a non-core chemicals business, and kept its forecast for a full-year profit of US$1.63 billion.

But the two companies, along with Sharp Corp, racked up combined losses of US$20 billion last year, leading them to have to axe jobs, sell assets and close facilities.