Mitsui Sumitomo Insurance Co Ltd (MSI) and the Hong Leong Financial Group’s (HLFG) conventional insurance partnership has been expanded to include Islamic Insurance with MSI acquiring a 35 per cent stake in the latter’s takaful company.
The HLFG takaful company has also adopted a new name – Hong Leong MSIG Takaful Berhad (HLMT) – after having obtained approvals from both Bank Negara and the Companies Commission of Malaysia.
MSI, a member of the MS&AD Insurance Group and one of the world’s largest general insurers, acquired the 35 per cent stake in HLMT for a cash consideration of RM33.64 million.
With this new alliance, Hong Leong and MSI are now common strategic partners to each other in all their Malaysian insurance businesses, covering life and general insurance, and takaful.
“We are very pleased to have this opportunity to take our partnership with MSI to the next level. Our partnership is now enhanced further with the takaful transaction.
“Our initial strategic partnership on conventional insurance has already delivered marked growth and progress in both our businesses.
“We are very optimistic that we can now further accelerate our growth as one of the leading insurance and takaful providers in Malaysia by leveraging each other’s strengths, expertise and know-how,” said HLFG President and Chief Executive Officer, Mr Raymond Choong.
MSI Director and Managing Executive Officer Mr Masaaki Nishikata said the partnership represented a strategic fit and that it was an important milestone, marking MSI’s first foray into Islamic insurance.
“Malaysia is an important market for MSI and takaful is the final piece of the insurance business that we want to have a foot into as part of our ongoing plans to expand our insurance ventures outside Japan.
“Like the strategic partnership with HLA, we will share our technical know-how – product development, underwriting support and training – and our global best practices with the HLMT team,” he added.
In June last year, HLFG and MSI formed a strategic alliance with the latter acquiring a 30 per cent in Hong Leong Assurance (HLA) for RM940 million to expand into Malaysia’s life insurance business. The partnership deal included the integration of HLA’s general insurance with MSIG Malaysia and HLFG holding a 30 per cent stake in the enlarged MSIG Malaysia entity.
HLA aims to bring its life insurance business to the next level of success through its “2335” (double in three years and triple in five years) aspiration. It had achieved its initial goals with new business annualised premium growth tripling from RM81 million (in 2007) to RM245 million in 2010. HLA’s total gross premium had also exceeded the RM1 billion mark in 2010.
Its Chief Executive Officer, Ms Loh Guat Lan, said the customer-focused company would expand its distribution channels and leverage on the partnership with MSI to introduce innovative products and strategic product mix.
“The synergistic activities – training and product development – are well in place and we are looking forward to the roll-out of a series of compelling products beginning from July,” she added.
In general insurance, MSIG Malaysia has emerged as the second largest general insurer in Malaysia after the successful integration of HLA’s general insurance business to MSIG Malaysia on Oct 1 last year. It is also ranked No 1 in fire and marine cargo insurance in Malaysia.
MSIG Insurance (Malaysia) Bhd Chief Executive Officer Mr Chua Seck Guan said the merger was completed in a record four months and that the company was well placed to surpass the RM1 billion mark in gross written premium this year.
“The combined operations will make MSIG Malaysia stronger and better positioned to lead the market with the benefits of economies of scale, combined distribution strength, more comprehensive product portfolio and better technical expertise,” he added.
Hong Leong obtained the takaful licence from Bank Negara in March 2006 and its Islamic insurance arm commenced business in November the same year with a paid-up capital of RM100 million and authorised capital of RM1 billion.
The company, the seventh largest takaful operator in Malaysia, offers family takaful including investment-linked products and all classes of general takaful business. It registered a gross contribution of RM65.45 million for the financial year ended 30 June 2010 compared with RM63.68 million the previous year.
(From Left to Right:Ms. Loh Guat Lan, Mr. Raymond Choong, Mr. Masaaki Nishikata, Mr. Chua Seck Guan)
