Insurance Australia Group (IAG) plans to sell its four Southeast Asian businesses in deals that could be valued at about $500 million, Reuters reported citing sources.
IAG has ventures in Malaysia, Thailand, Vietnam and Indonesia and could complete the sale by the third quarter, the sources said. IAG owns a 49 per cent stake in its Malaysian venture AmGeneral Holdings Berhad, 99 per cent stake in Thailand’s Safety Insurance P.C.L., 80 per cent stake in Indonesian insurer PT Asuransi Parolamas and 63 per cent of AAA Assurance Corp. in Vietnam.
The Asian market has proven to be a challenge for IAG, with the insurance giant reporting a $6m underwriting loss in the region in its fiscal half of 2018 – a slight improvement from the $9m loss it posted in the second half of 2017.
Asia’s overall earnings contribution also dropped to $10m in 2017 from $26m the previous year. In February, IAG said its Asian operations are under review amidst a lack of buying opportunities to boost growth in a region attractive for its low penetration rates but which is also very competitive.
The insurer did not provide financial details on the impact of the review, but according to Macquarie analysts, it will ultimately exit most markets in the region and free up about $800m of capital in the next few years, reported Reuters.