Zurich still in discussion with Koperasi MCIS on exit plans

KUALA LUMPUR: Zurich Financial Services Group (Zurich), Switzerland's biggest insurer, is still in discussion with Koperasi MCIS Sdn Bhd on its exit plans.


Zurich will have to relinquish its 40 per cent stake in MCIS Zurich Insurance Bhd now that it is buying another composite insurer, MAA Assurance Bhd (MAA), for RM344 million.

"We can't disclose details of our discussions with Koperasi MCIS but we will continue to work with all shareholders and the management team at MCIS Zurich to seek an amicable and satisfactory outcome," Zurich regional chairman of Asia-Pacific and Middle East, Geoff Riddell said.

In a recent email to Business Times, he did not say if both parties have met yet.

"Zurich is committed to the Malaysian insurance market and looks forward to a long and prosperous relationship with the various stakeholders in the market," Riddell said, replying to a query on Zurich's plans on its existing joint venture in MCIS Zurich Insurance.

Bank Negara Malaysia does not allow insurers to own two insurance companies in Malaysia.

Zurich has several options to consider now that it has acquired an alternative licence and gained control of MAA.

It may merge MAA with MCIS Zurich and retain management control of the enlarged entity, or sell MCIS Zurich and transfer its business and expertise to MAA.

On Zurich's immediate plans for MAA once the deal is concluded, Riddel said: "Directionally, MAA's businesses have been moving in a direction consistent with Zurich's chosen regional strategy - the manufacture and distribution of unit-linked and protection products through agents in life and the restructuring of the motor portfolio to improve profitability in general insurance."

"Given Zurich's expertise, we would anticipate an acceleration of growth in broadly the same strategic direction. Additionally, under Zurich's management, opportunities to broaden distribution channels and product breadth will increase significantly," he explained.

With a controlling stake in MAA, Riddel said, Zurich expects to exert more influence over the development of the strategy in MAA and its execution.

"We see Malaysia as an attractive growth market and we see MAA as a rare opportunity to acquire a controlling stake in a composite company with an infrastructure which would be extremely difficult to replicate from scratch," he added.