Singapore-based insurer Great Eastern Holdings, the insurance arm of OCBC Bank, is in discussions with Malaysia’s Employees Provident Fund (EPF) and Retirement Fund Inc (KWAP) regarding the sale of a minority stake in the latter’s Malaysian insurance unit, said a report by the Wall Street Journal.
In September 2017, WSJ had reported that Great Eastern, among other insurance majors, was exploring share sales. In 2009, Bank Negara Malaysia granted foreign insurers until end of June 2018 to reduce their stakes in local firms to 70 per cent. Failure to meet the local ownership law by the middle of this year will result in punitive action, with licence suspension one possible penalty.
Bloomberg reported last year that Prudential, Singapore’s Great Eastern and Japan’s Tokio Marine Holdings Inc were among the insurance firms exploring plans to reduce their equity interest in their Malaysian units.
The aggregate value of Malaysia’s four major insurers – Great Eastern, Tokio Marine, Prudential and AIA – amounts to RM130 billion ($33.2 billion) and comes at a time when Bank Negara seeks to consolidate the fragmented sector in the life and general insurance segment. As at 5 February 2018, insurance fund assets account for 5.2 per cent of Malaysia’s financial sector.