Korean takeover of ING's M'sian insurance business?

Price likely to be higher than that of MAA

PETALING JAYA: ING is in the advanced stages of disposing of its Malaysian insurance business to a South Korean insurer as part of its Asian insurance and investment management divestment operations, according to a source familiar with the matter. This may see some of the other South-East Asian ING insurance operations being bought over by the South Korean insurer.

At this juncture, the relevant parties are keen for the deal to go through. The disposal, he said, would involve the South Korean insurer either acquiring a controlling stake or the entire equity of ING's Malaysian insurance business. Without revealing further details due to the sensitivity of the deal, he said the price that would be paid for the acquisition would definitely be more than what Zurich Insurance Group paid for the acquisition of Malaysian Assurance Alliance Bhd (now rebranded and renamed Zurich Insurance Malaysia Bhd), that is RM344mil.

Due to ING's bigger insurance business and market share due to its larger agency force and wider suit of products and services, the price tag would be higher, he noted. ING insurance operations in Malaysia are currently undertaken by ING Insurance Bhd. ING Insurance is a wholly-owned subsidiary of ING Management Holdings Sdn Bhd, which in turn is wholly owned by Netherlands-based ING. McKinsey is said to be roped in as a consulting group for the proposed acquisition exercise.

The South Korean insurer, believed to be the top three insurer in that country, has for the last couple of months been making an in-dept study of the potential growth of the Malaysian insurance market and whether its growth target could be met. After realising the growth potential of the insurance market in Malaysia and its relatively strong economy and ING's firm foothold in the insurance sector, the source said it had decided to proceed with the acquisition.

By having operations in Malaysia, it would help Korean multinational companies in their businesses in terms of providing them insurance coverage and protection. At the moment, there is no Korean insurer in the country. According to recent foreign news reports, names like Korea Life Insurance Co and KB Financial Group had shown interest in acquiring ING insurance operations in the region.

Meanwhile, ING Insurance Bhd president and CEO Bruce M. Hodges in responding to queries from StarBiz on the proposed acquisition said: “ING Group is currently exploring options for a sale of its Asian insurance and investment management businesses, while keeping other options open.

“The group is committed to conducting these processes with the utmost diligence in the interests of all stakeholders, including our customers, employees and shareholders. No decision has been made on this matter. Please be reminded that news in the media other than what is officially released by ING is speculative in nature.”

Jan Hommen, CEO of ING Group, in a statement early this year said that given the uncertain economic outlook and turbulent financial markets, especially in Europe, ING had decided to explore other options for its Asian insurance and investment management businesses. He added that ING would continue preparations for a standalone future of the European insurance and investment management businesses, including an initial public offering.