AMMB sells stake in AmGeneral Insurance to Liberty Insurance, ink 20-year bancassurance partnership

AMMB Holdings Bhd’s (AMBANK, 1015) 51%-owned subsidiary, AmGeneral Holdings Bhd (AGHB), has obtained approval from the Finance Minister for the sale of its wholly-owned subsidiary AmGeneral Insurance Bhd (AGIB) to Liberty Insurance Bhd (LIB).

The banking group said AGIB is currently 51%-owned by AMBANK and 49%-owned by Insurance Australia Group (IAG).

The disposal, worth RM2.29 billion, will be split between RM1.35 billion cash and RM939 million for 30% stake in LIB, which includes irredeemable non-cumulative convertible preference shares (INCPS) to be determined later.

Upon completion of the deal, which is subject to customary closing conditions, LIB will acquire 100% of AGIB’s shares while AMBANK will receive its share of the sale proceeds in the form of cash and consideration shares.

As a result, AMBANK will hold a 30% interest in the businesses of AGIB and LIB.

AMBANK said as part of the transaction, the company will enter a 20-year new bancassurance partnership for the distribution of general insurance products.

In a nutshell, bancassurance is an arrangement which allows an insurance company to sell its products to a bank’s client base.

The operations of AGIB and LIB will be formally merged at a subsequent date, which will be announced in due course.

AMBANK group chief executive officer Datuk Sulaiman Mohd Tahir said the group is pleased to proceed with this strategic sale of its general insurance business.