Generali Group - the larger insurer in Italy - is expanding its operations in Southeast Asia through the acquisition of some of Axa Insurance's assets in Malaysia.
The company said Wednesday that it has signed an agreement with Axa to take controlling stakes of the former's Malaysian joint venture companies. The acquisition will make Generali Malaysia's second-largest provider of property and casualty insurance. Generali said it will also allow it to finally enter the nation's local life insurance sector.
According to sources, the deal is expected to be worth around $312 million. Generali agreed to buy a 53% controlling stake in AXA Affin General Insurance - operated by both Axa and Malaysia's Affin Bank.
Generali will also be taking a 70% stake in another Axa and Affin Bank joint venture company called AXA Affin Life Insurance. Axa said it expects to gain around $167 million from the sale of its stake in the two joint ventures.
As part of its expansion plan, Generali said it has submitted a request with Malaysian regulators to allow it to increase its stake in its local joint venture MPI Generali Insurans Berhad.
Generali is aiming to increase its stake from 49% to 100%. The company said it plans to later merge the joint venture with Axa Affin General Insurance. Generali said it expects to see a negative impact of around 3.5% on its solvency ratio as a result of the acquisitions.
Generali said it will be operating its Malaysian assets through two subsidiaries - one for the property and casualty business and the other for life insurance. Affin Bank will own a 30% stake each in the two subsidiaries.
"We are excited to be taking the (merged company) into the second position in the general insurance business arena and I look forward to growing our businesses together," Affin President and Group CEO, Wan Razly Abdullah Wan Ali, said.
Generali and Axa said they expect to complete the transactions within the second quarter of 2022. HSBC acted as the sole financial adviser for the transactions.
