MIDF Research said it is positive on the potential sale of AmMetLife Insurance to Great Eastern Holdings as the sale would enable AMMB to further streamline its capital structure while reducing its exposure to insurance-sector risks.
PETALING JAYA: Hot on the heels of AMMB Holdings Bhd
’s recent disposal of its 51%-held general insurance arm, analysts are bullish on the potential sale of AmMetLife Insurance Bhd and AmMetLife Takaful Bhd to Great Eastern Holdings Ltd.
Not only would the deal spur AMMB’s earnings going forward, it would also enable the group to have a sleek capital structure while not significantly affecting its fee income from its bancassurance business, they said. MIDF Research said it is positive on the potential sale of AmMetLife Insurance to Great Eastern Holdings as the sale would enable AMMB Holdings to further streamline its capital structure while reducing its exposure to insurance-sector risks.
“Earnings loss is not a huge concern, as AmMetLife’s contribution to the bottom line is unlikely to sustain at the less than 2% mark. AMMB could follow most of its banking peers and sign a bancassurance contract with the new entity to preserve some of its fee income,” the research house said.AmMetLife Insurance and AmMetLife Takaful is a 50:50 joint venture between AMMB and US-based Metlife International Holdings.“AmMetLife specialises in life insurance, with a wide variety of medical and health insurance plans, as well as wealth offerings.
“The market share is not large. With the group reporting a gross written premium of RM617mil in March 2022, we doubt this reaches even 4% of the local market share,” MIDF added.
In a Bursa Malaysia announcement this week, AMMB Holdings said that preliminary discussions had commenced with Great Eastern Holdings pertaining to AmMetLife Insurance and AmMetLife Takaful.
It said, however, the discussions are an ordinary part of its business review.
“It is crucial to note that these talks are still at a very preliminary stage. At this juncture, there is no certainty that we will enter into any definitive or binding agreement,” AMMB added.
Bloomberg News reported on Monday that Great Eastern, a subsidiary of the Oversea-Chinese Banking Corp, was in talks to acquire AmMetLife.
