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18 June 2010
Hong Leong Financial Group Berhad and Mitsui Sumitomo Insurance Co., Ltd. Form Strategic Partnership
 

Hong Leong Financial Group Berhad (HLFG) and Mitsui Sumitomo Insurance Co., Ltd. (MSI) today formalized a strategic partnership agreement involving the life and general insurance businesses of the two companies in Malaysia.

The agreement follows Bank Negara’s approval on 17 June 2010 for the partnership which involves Hong Leong Assurance Berhad (HLA), HLA Holdings Sdn Bhd (HLAH) with MSIG Insurance (Malaysia) Bhd (MSIGMalaysia) and MSI.

The partnership details:

1. HLA merges 100% of its General Insurance with MSIG Malaysia for 30% equity in the enlarged entity

HLA will merge 100 per cent of its General Insurance with MSIG Malaysia for consideration of 30 per cent shares of the new enlarged MSIG Malaysia entity. The shares will be issued to HLAH, the parent company of HLA and the wholly owned subsidiary of HLFG. The enlarged entity will make MSIG Malaysia the second largest general insurance company by gross written premium in the country with no. 1 position in Fire Insurance and an enlarged no. 1 lead in Marine Cargo Insurance.

“The enlarged entity will be more robust and resilient, and poised to better compete and lead in the marketplace. Our customers will benefit from the combined distribution strength, more sophisticated product development and technical expertise,” said Mr. Raymond Choong, Hong Leong Financial Group Berhad President and Chief Executive Officer.

As part of the agreement, MSIG Malaysia will enter into a new bancassurance agreement with Hong Leong Bank Bhd (HLB) for the distribution of general insurance products throughout its network of 185 branches in Malaysia. Similarly, HLA will enter into a revised bancassurance agreement with HLB.

“This is indeed exciting times for both MSIG Malaysia and HLA. Both our teams will be working hand in hand to ensure a smooth transition over the next few months,” said Chief Executive Officer of MSIG Malaysia, Mr. Chua Seck Guan.

2. MSI buys 30% equity in HLA

HLAH will divest 30 per cent of its equity in HLA to MSI for a cash consideration of RM940million.

Mr. Choong said, “The partnership would enable HLA to better focus on developing its Life business, harnessing MSI’s strength in marketing distribution and product innovations. We look forward to working with MSI to further fortify and enhance our Life business in the country”.

MSI Director and Managing Executive Officer Mr. Masaaki Nishikata said the strategic alliance is a win-win proposition for the two companies to expand the insurance business in Malaysia. “We are excited about this significant and timely collaboration, and we will leverage on our collective brand strength, expertise and combined force to making further inroads in Malaysia” he added.

The alliance with HLFG, according to Mr. Nishikata, would allow MSI to achieve expansion of its life business in Asia. Malaysia is a key market for MSI and this partnership is an important development for the Group’s ambitions.

The proposed transaction is expected to be fully completed by Q4 2010 after all regulatory approvals have been obtained, including shareholders approval and issuance of the High Court vesting order.

(From Left to Right:Ms. Loh Guat Lan, Mr. Raymond Choong, Mr. Masaaki Nishikata, Mr. Chua Seck Guan)

 

 



      
 
           
 
   
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