SINGAPORE, Oct 4 — Great Eastern Holdings Ltd’s proposed acquisition of AmMetLife Insurance Bhd (AML) and AmMetLife Takaful Bhd (AMT) will enhance its market leadership within the Malaysian insurance and takaful market, said S&P Global Ratings.
The Singapore-based Great Eastern group is using its Malaysian subsidiaries – Great Eastern Life Assurance (Malaysia) Bhd (GELM) and Great Eastern Takaful Bhd (GETB) – for the proposed acquisition of AML and AMT from AMMB Holdings Bhd.
The credit ratings provider said the addition of AML and AMT’s insurance and wealth protection solutions will supplement the Great Eastern group’s product offerings.
Their exclusive 20-year distribution partnership for all Malaysian life insurance and family takaful products via AMMB’s banking subsidiaries’ network will raise the group’s accessibility within Malaysia.
“We expect Great Eastern group’s prospective capitalisation after the proposed acquisition to remain robust, benefiting from healthy profitability and high-profit retention,” it said in a statement issued here today.
As of June 30, 2023, Great Eastern group shareholders’ equity stood at S$7.4 billion (S$1=RM3.43), with a net profit of S$445.2 million, based on International Financial Reporting Standards 17.
“We anticipate Great Eastern group will use cash from GELM and GETB to fund the proposed acquisition and the exclusive distribution partnership, which amount to RM1.21 billion.”
It noted that “this is modest relative to the group’s financial resources.”
“We expect solvency at GELM and GETB to remain well above the regulatory minimum requirement, despite a slight decline after the proposed acquisition.
“In our view, the group has the financial resources and earnings capacity to absorb the acquisition cost while maintaining its robust capital position,” it said.
Based on S&P Global Ratings’ estimates, the combined assets of AML and AMT represented 1.5 per cent of Great Eastern group’s total assets as of end-2022.
GELM is the largest life insurer and GETB is among the top five takaful companies in Malaysia.
The completion of the proposed transaction is subject to regulatory approvals.
— Bernama
