Kurnia Asia sells insurance arm to AmG for RM1.55 bln cash

KUALA LUMPUR: Kurnia Asia Bhd is disposing of its 100% stake in Kurnia Insurans (M) Bhd toAmG Insurance Bhd for RM1.55 billion cash following the completion of a bidding process involving several parties.

It said on Thursday it had signed a sale and purchase agreement with AmG -- a 51% owned subsidiary of AMMB Holdings Bhd -- for the sale of 600 million shares in Kurnia Insurans.

This comprised of 370 million exisiting shares and 230 million new shares to be be issued from the conversion of the existing RM230 million nominal value of irredeemable convertible subordinated debt (ICSD) of Kurnia Insurans.

“The company will convert the ICSD into new shares on or before the completion date of the proposed Kurnia Insurans disposal. The sale consideration for the sale Shares of RM1,55 billion (subject to adjustment on completion) is to be satisfied in cash,” it said in an announcement to Bursa Malaysia.

“The sale consideration of RM1.55 billion was arrived at through a bidding process involving several parties” it said.

Kurnia Asia said in considering the sale price, the board took into account the market valuation of comparable insurance companies.

Other factors were Kurnia Insurans' net assets of RM688.54mil based on the audited financial statements as at Dec 31, 2010 and Kurnia Insurans' net assets of RM756.52mil based on the unaudited financial statements as at June 30, 2011.

Two other factors were Kurnia Insurans' profit after taxation of RM58.711 million for FY ended Dec 31, 2010 and its net profit of RM45.66mil based on the unaudited financial statements for the six months ended June 30, 2011.

The chairman of AMMB and AmG, Tan Sri Azman Hashim said: “This acquisition will position us to deliver on AmG's strategic objective of being among the top three domestic general insurers.

"The combined businesses of AmG and Kurnia will emerge as the largest domestic general insurer and the market leader in motor insurance.”