In an attempt to tap into Malaysia's $4.2 billion life insurance market, AXA Asia Pacific and its joint venture partner AFFIN Holdings Berhad (AHB) will pay M$121 million ($32 million) for Tahan Insurance.
Discussions for the purchase of Tahan began back in August and a joint venture agreement with AHB was put forward as a vehicle for making the acquisition. AXA Asia Pacific will own 49.999% of the JV while AHB will hold just over half of the shares. The two companies already have a joint venture covering general insurance in Malaysia.
The new deal will see AFFIN Bank acting as the exclusive distributor of the life product through its branch network while AXA will contribute its regional policy blueprints, particularly its bancassurance blueprint.
Australia-based AXA Asia Pacific has been expanding in Asia since it began streamlining its business in 2000. The life insurance and wealth management company has assets under management of A$66 billion (as at end June 2005) and now generates a significant amount of its profits from the Asia region.
In August, AXA mooted a joint venture in India with Bharti Enterprises in which it would hold a 26% equity interest, the maximum currently allowed under Indian law. It is expected that the joint venture will invest up to A$130 million in the first four years of operation to establish a foothold in the Indian market.
AXA's businesses in other parts of the region have been performing well. In the first half of this year, its premium income from China, Indonesia, the Philippines, Thailand and Singapore was up 72.5% to A$329.2 million and funds under management were up 7.1% to A$1.5 billion. While in Hong Kong operating earnings were up 9.6% and the value of new business was up 6.3%.
The company's bancassurance joint venture in Indonesia with Bank Mandiri has achieved strong results, with AXA now ranking second in the market for new business share.
The Tahan Insurance deal in Malaysia still requires regulatory and shareholder approval but is expected to be completed by early 2006.
