Singapore's Great Eastern Holdings Acquires Tahan Insurance in Malaysia

Posted on Aug 18, 2010 by Sergio Ulloa (G+)

The RM15 million (US$4.7 million) acquisition of Tahan Insurance by Singapore listed Great Eastern Holdings has been given approval by Bank Negara. The takeover will be completed by Great Eastern Holdings wholly owned Malaysia insurance company, Overseas Assurance Corporation Malaysia (OACM), who already operate in the Malaysian general and life insurance market. Bank Negara, Malaysia's central bank, took control of Tahan Insurance after the previous Malaysian owners, namely Idaman Uggul Bhd, were unable to meet the Malaysian Central bank's capital threshold requirements. Bank Negara has been looking for prospective buyers since it took control of Tahan Insurance, with numerous interested parties, including Fairfax Asia, Tokio Marine Asia and Allianz Malaysia, all failing to negotiate terms. In May 2009, Pricewaterhouse Coopers (PwC) were instructed by Bank Negara Malaysia to find buyers for the general insurer Tahan Insurance, with Great Eastern Holding finally negotiating a deal in August 2010. The potential purchase of Tahan Insurance is still subject to final approval by regulators, but the deal is expected to be completed by the fourth quarter of this year. Great Eastern Holdings will complete the acquisition of Tahan Insurance through its life and general insurance subsidiary Overseas Assurance Corporation Malaysia (OACM), a wholly owned Malaysian enterprise. The acquisition is expected to cost Great Eastern Holdings approximately RM15 million (US$4.7 million ) and further cement OACM's presence in the Malaysian insurance industry. This will mean that OACM will obtain an increased number of policyholders in the Malaysian insurance industry and gain access to Tahan range of insurance products, which include; motor, health, medical care and travel insurance. Great Eastern Holdings Group CEO -Mr Ng Keng Hooi said, "This is one of our plans for OACM to play a more significant role in the general insurance industry. Based on the Group's strong track record and financial resources, we are confident and well positioned to expand this business and achieve greater growth in the years ahead." The takeover by Great Eastern Holdings is part of a strategy to expand their business activity in Malaysia, with Mr Ng Keng Hooi further saying: "From the commercial point of view, there are opportunities to expand our customer base and synergise our products and distribution strengths. The synergy created from the acquisition will further strengthen OACM's vision to become the general insurer of choice in Malaysia." In December 2009, OACM's network in Malaysia stood at 12 branches and 6 servicing offices, with more than 2600 insurance agents. This business generated a gross premium income of RM223 million (US$ 70.4 million), with total assets exceeding RM380million (US$ 120 million). OACM and Tahan Insurance are expected to sign a Business Portfolio Transfer Agreement shortly; allowing them to file an application to the High Court of Malaya for final approval and transfer of business from Taham to OACM. In the interim period Tahan policyholders will continue to be served by Tahan insurance until final takeover is completed. Insurance Companies Mentioned: Overseas Assurance Corporation (OAC) Overseas Assurance Corporation (OAC) is the oldest composite insurer in Singapore handling both life and general insurance. Since December 2000 when it became a fully-owned subsidiary of Great Eastern Holdings, its focus has been on strengthening its bancassurance business, with its products distributed through OCBC Bank's banking network throughout Singapore. It also provides general insurance in Singapore and Malaysia. Great Eastern Great Eastern is the oldest and most established life insurance group in Singapore and Malaysia. With $50.9 billion in assets and 3.8 million policyholders, it has two successful distribution channels - the tied agency force and bancassurance. The Company also operates in China, Indonesia, Vietnam and Brunei. Tahan Insurance Tahan Insurance Malaysia Berhad provides a range of services in the general insurance business and life assurance. It underwrites general business, such as motor, fire, accident, marine, aviation, and engineering, as well as life.