KUALA LUMPUR: MAA Holdings Bhd will not proceed with the sale of a 49% stake in its wholly owned composite insurer Malaysian Assurance Alliance Bhd to AMMB Holdings Bhd’s general insurance unit AmG Insurance Bhd.

It is instead planning to sell a strategic stake to Zurich Insurance Co Ltd.  

In a statement to Bursa Malaysia yesterday, MAA Holdings said the company and AmG had mutually agreed to discontinue talks for the proposed disposal. No reason was specified.

In a separate announcement, MAA Holdings said it had entered into an agreement with Zurich to negotiate the acquisition of a strategic interest in Malaysian Assurance by Zurich. MAA Holdings said Bank Negara Malaysia (BNM) had given the nod for both parties to begin negotiations on the disposal.

“The agreement is not subject to the approval of the shareholders of MAA Holdings. BNM has no objection in principle for both parties to commence preliminary negotiations.

“MAA Holdings will make the necessary announcements in due course on further developments,” the company said.

News of MAA Holdings’ intention to sell a 49% stake in Malaysian Assurance surfaced in July 2007. In September that year, BNM had given its consent to MAA Holdings to commence talks with four potential acquirers.

These included Allianz Insurance Management Asia Pacific Pte Ltd, Kurnia Asia Bhd and Nippon Life Insurance Co besides a consortium comprising AXA Asia Pacific Holdings Ltd and Affin Holdings Bhd. A month later, MAA Holdings said AMMB’s insurance arm AmAssurance Bhd was also keen to acquire a stake in Malaysian Assurance.

Allianz, Kurnia, Nippon and the AXA-Affin consortium eventually withdrew from negotiations with MAA Holdings.

In November 2008, MAA Holdings, Malaysian Assurance, and AmG signed a memorandum of understanding (MoU) to formalise talks for the sale of the stake in Malaysian Assurance to AmG for RM274.8 million. The price represented a price-to-book multiple of 2.6 times.

The MoU also involved the acquisition of a 4.9% stake in MAA Takaful Bhd by AmG for RM16.2 million or RM3.30 a share.

In April 2009, the price for the stake in Malaysian Assurance was revised to RM254.83 million. The Securities Commission (SC) approved  the revision three months later.

In November 2009, the price was further revised downwards to RM180 million, taking into account the standalone value of Malaysian  Assurance without a strategic cooperation agreement on the takaful business with MAA Takaful.

The SC approved the second revision in February 2010. In July, the regulator granted MAA Holdings an extension of eight months till  March 19, 2011, to complete the disposal of the Malaysian Assurance stake.

This article appeared in The Edge Financial Daily, December 17, 2010.