ING Granted Exception by Malaysian Securities Commission

Posted on Nov 03, 2011 by Sergio Ulloa (G+)

ING Insurance Asia N.V., one of the largest active foreign insurers in Malaysia, has been granted an important exemption by the country's Securities Commission, which will enable the company to abstain from making a mandatory offer for the remaining equity stakes in its ING Public Takaful Ehsan Bhd and ING Funds Bhd operations as a result of corporate restructuring elsewhere. In a statement released by the insurer today, ING explained that the mandatory offer obligation for its other ventures would have come about due to an internal corporate restructuring and streamlining proposal, which involved ING Group's insurance operations both in the United States and across the European-Asian region. As part of the restructuring deal reached between ING and EU banking authorities in 2008, the Dutch group agreed to split its global insurance operations in the aftermath of the global financial crisis. Under the terms of the GBP 7 billion bailout package, the European Commission regulators demanded ING to sell its insurance business within four years and to instead focus on its banking operations. In conjunction with this grand intercontinental corporate restructuring exercise, ING Insurance International will attempt to transfer its 100 percent equity interest in ING Management Holdings (Malaysia) into ING Insurance Asia. After this proposed transfer is finalized, ING Insurance Asia will hold both an indirect 60 percent equity interest in ING Public Takaful as well as an indirect 70 per cent equity interest in ING Funds. Under law, such a development would necessitate a bid for the remaining stakes in both branches, but this will now not be the case. The remaining shareholders of ING Public Takaful (who are Malaysia's Public Islamic Bank and Public Bank) and of ING Funds (namely TAB Inter-Asia Services Sdn Bhd) had provided undertaking letters that they would not accept a takeover offer if such an offer is made. And on that basis the Dutch insurance conglomerate made an application to the Securties Commission Malaysia on Sept 14 seeking the exemption. "The exemption was granted by the SC on Oct 25," the company's statement read. ING first entered the Malaysian insurance market in 1987 and have gone on to become a market leader in the individual life insurance and employee benefits businesses in the Southeast Asian country. The company offers all classes of insurance, including individual life, group and general insurance products. Today, ING Insurance Berhad is the fourth largest insurer in Malaysia in terms of total gross written premium. In the Employee Benefits market, ING is the number one provider in the country. Malaysia has fast become one of Asia's most promising insurance markets and is attracting considerable attention from overseas investors looking to new regions for sustained premium growth. According to a recent industry report issued by Bank Negara Malaysia (BNM), Malaysia's central bank, both the standard insurance and takaful (shariah islam compliant) sectors have seen a surge in domestic demand for savings and protection products. In the past 5 years, the Malaysian insurance industry has experienced a compound average growth rate of 27 percent per anum in terms of net premium contributions, with family takaful policies leading the way. Growth has been driven by a strong post-2009 economic recovery, rising per capita GDP, and thus increased Malay consumer capacity for common life, non-life and investment-linked protection insurance services. The Malaysian government is working hard to pursue substantial investment programs with the goal of doubling GDP per-capita and turning Malaysia into a high income country by 2020. New parliamentary initiatives such as the New Economic Model (NEM), Economic Transformation Program (ETP) and the Tenth Malaysian Plan will, according to industry observers, eventually contribute to sustained growth in demand for insurance products and services. Demand for adequate protection products is only expected to rise as the market still remains largely untapped with only around 54 percent of the Malaysian population currently holding either a life insurance or family takaful policy. In conjunction with overall macroeconomic development, more regulatory measures are expected in the near future to update Malaysia's insurance market to increase professionalism and more closely match international standards. A new tax break and incentive scheme introduced by the Malaysian government for their 2012 budget could work to encourage more citizens to purchase protection products to plan for their future and boost the local insurance industry. The BNM has also recently come out with revised guidelines on motor insurance, aimed at curbing fraud and ensuring consumers understand the appropriate market value of their motor vehicle when applying for coverage. The new rules came into effect on August 1st 2011 and have already worked to address many grievances in the claims heavy motor insurance sector. In addition, Malaysia's government has committed to the gradual financial liberalization of its Islamic finance sector and plans are also underway to introduce compulsory travel insurance cover for all Malaysians traveling overseas by year's end. The most consistent industry growth driver going forward will be the overall changing consumer attitude towards insurance throughout the Asia Pacific region, which have become more readily apparent in the past few years. According to research conducted by ING themselves, 83 percent of all Malaysian consumers believe that there is now a much greater need to insure their family and property now than compared to even 12 months ago. Rising healthcare costs and overall lifestyle expectations has enabled the attitude towards, and awareness of, insurance to change very quickly, and is now seen as an integral savings and investment tool throughout the region's emerging middle class populace. Overall, the rise in income, healthcare, education and housing opportunities across most of Asia, have given families in the region greater access to a lifestyle they would now like to protect. Multinational insurance powers like ING are taking note of this incredible opportunity. Companies Mentioned ING ING provides banking, investments, life insurance and retirement services and operates in more than 50 countries. It serves more than 85 million private, corporate and institutional customers in Europe, North and Latin America, Asia and Australia. Bank Negara Malaysia Bank Negara Malaysia is Malaysia's central bank, tasked with overseeing the nation's economic and financial systems.