MAA Holdings Bhd owns:
100% MAA Berhad
75% MAA Takaful
100% MAA Corp Sdn Bhd
49% MAA Bancwell Trustee
NST / Kuala Lumpur: MAA Holdings Bhd (MAAH) (1198) is poised to sell 70 per cent of its composite insurance outfit, Malaysian Assurance Alliance Bhd (MAA), to Zurich Insurance Co Ltd for an estimated RM1.2 billion.
An industry source said the deal does not include MAAH's Islamic insurance unit, MAA Takaful Bhd.
However, it is learnt that both parties may talk about the takaful business once the latest deal is concluded.
In 2008, MAAH offered AmAssurance Bhd 4.9 per cent of its Islamic insurance arm as part of a bigger deal to sell its general insurance business. That RM180 million deal had since been scrapped. Zurich Financial Services Ltd (Zurich FS) global corporate business head Geoff Riddell told Business Times two years ago that the group was keen on the takaful business.
"We are still looking at how we can do takaful. I don't consider takaful (proposal) dead," he had said.
Zurich FS' acquisition of MAA may spell the end of its alliance with Koperasi MCIS Bhd through their joint venture, MCIS Zurich Insurance Bhd.
Koperasi MCIS holds a 43.69 per cent stake in the joint venture, while Zurich FS owns 40 per cent.
In 2009, Business Times reported that Zurich FS, Switzerland's biggest insurer, may sell its shares in MCIS Zurich after a failed plan to expand the business had strained relationship between the major shareholders.
"It is well known that Zurich FS has been planning to reposition its operation here since early 2009. It has considered several options, including acquiring an alternative licence and gaining control of another insurer such as MAA," said the source.
Nevertheless, Zurich FS could also merge MAA with MCIS Zurich and retain management control of the enlarged entity, or sell MCIS Zurich and transfer its business and expertise to MAA.
Zurich Insurance's 70 per cent stake in MAA is the maximum allowed under Bank Negara Malaysia's (BNM) relaxed foreign ownership rules.
BNM does not allow insurers to own two insurance companies in Malaysia. This means that Zurich FS must sell its MCIS Zurich's insurance business or merge the insurers.
It is also understood that Zurich FS may have had prior engagement with BNM to explain its intention and address its concerns.
MAA, once the largest locally-owned insurer, is forced to sell its insurance business after reeling from solvency issues and inadequate capital reserve.
It has until August 2011 to raise money to meet BNM's ruling on risk-based capital framework, which requires an insurer to maintain a capital adequacy level that matches its risk profile.
MAAH executive chairman Tunku Datuk Ya'acob Tunku Abdullah is considering refinancing a RM200 million loan or a rights issue.
MAAH shares resumed trading yesterday after it had requested for the suspension last Monday, in response to the recent movement in its share price.
Prior to the suspension, the stock had traded at RM1.05, its highest since December 16 2010.
Yesterday, it fell 6.67 per cent to 98 sen, on a high volume of 33.7 million shares.
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As at end of 2010, MAA Holdings has a net asset per share of RM0.94. Its paid up is 304.3m shares. There are no major liabilities that is not covered by its net assets. Hence assuming everything is equal. The RM1.2bn deal, if true, is worth RM1.2bn/303.4m = nearly RM4.00 per share.
Such a gap, makes me wonder if its remotely true at all. Plus according to NST, it does not even include Takaful. I hope its not a typo error, but still even if the deal is RM120m and not RM1.2bn, at RM120m, that's already nearly 40% of the market cap of MAA Holdings.
Surprisingly, though its a "hearsay commentary" by NST, only NST carried it. Trade at your own discretion, I am just putting up the numbers for your consideration.
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