Bank Simpanan Nasional collaborates with America’s Prudential Financial to purchase Uni.Asia Life Assurance - IFN

Bank Simpanan Nasional collaborates with America’s Prudential Financial to purchase Uni.Asia Life Assurance

Daily Cover

MALAYSIA: Bank Simpanan Nasional (BSN), Malaysia’s state financial institution, has entered into a joint venture agreement with America’s Prudential Financial (Prudential) for the purchase of 100% of Uni.Asia Life Assurance (UAL) from Uni.Asia Capital (UAC). Through its insurance unit, Prudential Insurance Company of America (PICA) and BSN has agreed to pay a cash consideration of RM518 million (US$156.32 million) for UAL’s shares. Subject to the approval of Bank Negara Malaysia, the country’s central bank and life insurance regulator, PICA will acquire 70% of UAL shares while the remaining 30% will be held by BSN. BSN’s present subsidiaries are Permodalan BSN, the bank’s wholly-owned asset management arm which has launched three Shariah compliant funds, and Prudential BSN Takaful (PruBSN), a Takaful business partnership between BSN and Prudential Holdings. PruBSN in April announced an increase in business sales amounting to RM265.7 million (US$84.13 million) for the year 2012, a 15% hike from the previous year. With a market share of 28.4%, the company is currently the leading Takaful provider in the country. UAC on the other hand, is a joint venture company between DRB Hicom and United Overseas Bank, each holding 51% and 49% respectively. In a released statement, following the completion of the deal, Prudential and BSN will work together with UAL to develop a high-quality agency sales force based on Prudential’s ‘Life Planner’ model focusing on needs-based selling, and explore alternative channels to help meet the insurance needs of customers in the urban and semi-urban centers and rural areas of Malaysia. Commenting on the venture, Adinan Maning, CEO of BSN said: “This is an important investment for BSN in an industry and market that offer strong potential for growth.” Meanwhile, in an emailed report by Moody’s Investor Service, senior vice-president Scott Robinson stated that Prudential’s joint venture with BSN to buy Malaysia’s UAL is credit positive. “The expansion into Malaysia provides Prudential a platform for life insurance sales in a high-growth region, a credit positive.” Estimated to close by the end of 2013, the acquisition will result in the disposal of UAL’s entire issued and paid-up ordinary shares.