Fri 11 Jan 2019
It was reported by the media (Edge Daily Online) that Finance Minister Lim Guan Eng has come out to say that Singapore insurer Great Eastern Life Assurance (Malaysia) Bhd is exempted from Bank Negara Malaysia’s (BNM) ruling on foreign ownership of local entities.
Great Eastern is granted the exemption as it has pledged a minimum RM2 billion contribution to a health scheme for the bottom 40% of the population (B40).
In his Budget 2019 speech on Nov 2 last year, Guan Eng had announced that Great Eastern had agreed to contribute the initial seed funding of RM2 billion to this fund, which will be managed by BNM.
He added that other foreign insurance companies which contribute to the scheme will also be exempted from having to reduce their equity.
The B40 Health Protection Fund is an initiative piloted by the federal government in partnership with the private insurance industry.
Under the scheme, the government together with private insurers will provide free protection against the top four critical illnesses and up to 14 days of hospitalisation benefits starting in January this year.
At the time, the report said that the media reported that insurers which had not reached the shareholding spread were looking to pare their stake amid the regulation, including through direct sale or initial public offerings.
These included names like Tokio Marine Holdings plc and Prudential plc, the latter of which reportedly sought a share sale to raise US$700 million, according to Bloomberg.
Local funds like Kumpulan Wang Persaraan (Diperbadankan) and the Employees Provident Fund had also expressed interest to buy into certain insurers, including Great Eastern at that time, the report added.
With newsflow potentially rising in the sector, several research houses incidentally have been calling for overweighting the sector due to its defensive nature amidst a volatile market environment.
Companies in the insurance business, traditionally shunned for being unexciting, featured prominently in several December strategy reports of research houses according to a media report.
Another research house said that insurance is the fastest growing segment in the services sector in the first three quarters of 2018.
It expects the trend to continue in 2019, boosted by further liberalisation of the industry and several government’s initiatives aimed at increasing take-up rates.
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Insurance sector current trading outlook