KUALA LUMPUR (Aug 10): Recent insurance and takaful transactions involving Malaysian banks reflect different strategic, regulatory and capital considerations rather than a broad industry shift towards outright ownership of insurers, CIMB Securities said in its note Monday.
According to the research house, deals involving Malayan Banking Bhd (KL:MAYBANK), Public Bank Bhd (KL:PBBANK), Bank Kerjasama Rakyat Malaysia Bhd (Bank Rakyat) and RHB Bank Bhd (KL:RHB) highlight that there is no one-size-fits-all approach to insurance ownership and bancassurance.
“While insurance and takaful are becoming increasingly important within the broader banking ecosystem, outright ownership is not inherently superior to the distribution model,” CIMB Securities said.
Instead, banks are likely to choose structures that best match their capital positions, strategic priorities and customer ecosystems. For many lenders, the research house said, long-term bancassurance partnerships remain attractive as they provide recurring fee income while giving banks access to insurance products for wealth management and cross-selling.
Public Bank's RM1.72 billion acquisition of a 44.15% stake in insurer LPI Capital Bhd (KL:LPI) from the family of its late founder Tan Sri Teh Hong Piow in October 2024 was largely driven by regulatory considerations and closer strategic alignment, CIMB Securities said. The deal gave Public Bank greater control over an insurer that had long been closely associated with the banking group.
Maybank, meanwhile, is seeking full economic ownership of its insurance and takaful operations through its proposed acquisition of the remaining 30.95% stake in Maybank Ageas Holdings Bhd from Belgian insurer Ageas SA for RM4.83 billion. The transaction would give Malaysia's largest lender full ownership of Maybank Ageas Holdings, which houses its Etiqa insurance and takaful businesses.
Bank Rakyat is taking a different route in its proposed acquisition of MNRB Holdings Bhd's (KL:MNRB) takaful business, reflecting efforts by the development financial institution "to internalise a larger share of the economics" generated from takaful products distributed through its customer network, CIMB Securities said.
RHB, on the other hand, appears to be moving towards "a more capital-light structure" as it is in active negotiations with Tokio Marine Asia Pte Ltd over the potential disposal of up to 100% of its stake in RHB Insurance Bhd. Under the proposed transaction, RHB Insurance would be merged with Tokio Marine Insurans (Malaysia) Bhd to create an enlarged insurance company, with RHB retaining a stake of up to 35%.
Taken together, CIMB Securities said the transactions show that there is no single optimal ownership structure for banks seeking exposure to insurance and takaful. Ultimately, the key consideration is not the percentage owned, but whether the chosen structure or mode of distribution can deliver attractive risk-adjusted returns and sustainable shareholder value over time and enhance capital efficiency, it said.
"In our view, banks capable of consistently converting excess capital into dividends and other special distributions deserve to trade at a premium P/BV multiple, even in a more moderate earnings growth environment," it said.
The research house added that the cheapest banking stocks may not necessarily be the most attractive, with investors likely to focus increasingly on lenders capable of turning surplus capital into sustainable shareholder returns.