KUALA LUMPUR (Aug 5): MNRB Holdings Bhd (KL:MNRB) surged to a new all-time high on Wednesday after agreeing to sell its Islamic insurance units.
The disposal of Takaful Ikhlas Family and Takaful Ikhlas General comes at a time when the global reinsurance market is entering a ‘softening cycle’ — characterised by abundant capital, falling premium rates, and intense competition as reinsurers are eager to underwrite more business.
If the deal goes through, MNRB can sharpen its focus on reinsurance and retakaful while concentrating in Asia Pacific where the company has said opportunities remain “abundant for diversified yet profitable growth”.
MNRB surged as much as 29 sen or 11% to RM2.97. The stock ended the day at RM2.87 after more than four million shares exchanged hands. The national reinsurer firm is worth over RM2 billion based on its last price.
Shares of MNRB have gained more than 40% so far this year thanks to new all-time high earnings in the recently ended financial year from record revenue and lower claims.
The deal’s price tag of RM1.64 billion values at about 15 times their combined earnings, a tad below Malayan Banking Bhd’s (KL:MAYBANK) proposed acquisition announced on Monday for the full control of its own insurance arm.
Maybank Investment Bank’s research arm is the only sell-side house covering MNRB, which maintained the stock on ‘buy’ call with target price of RM3.05 at the last review on May 21.
However, the investment bank is also advising MNRB on the deal.