Malaysia’s RHB Bank has received approval from bank Negara, Malaysia’s central bank, to start discussions to sell off up to 94.7 percent of its general insurance units to Japan’s Tokio Marine.
Tokio Marine, Japan’s largest property and casualty insurers by market value could buy out RHB Insurance for as much as $500 million. The announcement comes months after Tokio Marine expressed its interest in widening its geographical foothold.
According to RHB bank’s annual report, RHB Insurance is the 10th largest insurer in Malayasia. A statement released by the bank management says, “As you are aware RHB Bank has a strong and long standing business relationship with Tokio Marine Life Insurance since 2010, through our existing life insurance distribution partnership. The proposed new general bancassurance partnership will further strengthen the relationship between RHB Bank and Tokio Marine group, reflecting long term commitment and confidence both parties have in the partnership.”
In a note to investors yesterday, Hong Leong investment bank research analyst, Chan Jit Hoong estimated that if the merger materialises, it would see the banking group register a disposal gain of up to RM800 million. She said, “ If we were to assume the management is capable of fetching 2.35 times price to book ratio for its insurance unit, RHB is poised to book in disposal gains of RM700 to RM800 million.”
The approval is valid for six months from the date of BNM’s letter dated July 29. A detailed announcement on the discussion would be made after the signing of the agreement.