Sanlam buys 51% stake in MCIS Zurich

PETALING JAYA: Zurich Insurance Group Ltd, Switzerland's biggest insurer, has finally cashed out from its troubled partnership with Koperasi MCIS Bhd, paving the way for South Africa's Sanlam Group to acquire a 51% stake in composite insurer MCIS Zurich Insurance Bhd for RM387.6 million.
This confirms a report by SunBiz in June 2013 that Zurich was negotiating with the South African financial services group to sell its 40% stake in MCIS Zurich.
The deal will see Koperasi MCIS relinquishing its controlling stake to Sanlam Emerging Markets Proprietary Limited (SEM), the cluster within the Sanlam Group, five years after news broke that Zurich may sell its shares in MCIS Zurich after an aborted plan to expand the business strained relationship between the major shareholders.
Koperasi MCIS held 43.69% in MCIS Zurich, a privately-held medium-sized insurer, while Zurich FS another 40%. Atalantik Sdn Bhd holds a 4.35% stake and the balance by other minority shareholders.
Zurich will sell its entire stake of 40.11 million shares in MCIS Zurich to Koperasi MCIS Bhd for RM7.58 per share for RM304 million in cash.
SEM will claim its 51% interest MCIS Zurich in two phases.
SEM will first buy a 40% stake in MCIS Zurich from Koperasi MCIS and another offer to acquire 11% from minority investors at RM7.58 per offer share.
Should there be insufficient minority acceptances through the take-over offer; Sanlam will buy the additional shares necessary to reach a 51% interest directly from Koperasi MCIS.
After the purchase, SEM will have to sell MCIS Zurich general insurance business here as just last year, it acquired a 49% stake in local general insurer Pacific & Orient Insurance Co Bhd for RM270 million. Bank Negara Malaysia does not allow an investor to operate more than one life or general insurance licence.
"Under Malaysia's regulatory regime, an investor may not do business under more than one life or general insurance license, unless the second is a takaful (Sharia-compliant insurance) license."
"SEM will therefore not be able to maintain an interest in another general insurance business in Malaysia due to its existing holding in POI. As a result, MCIS Zurich will seek to sell or find an alternative solution for the general insurance business," SEM said in a statement released yesterday.
SEM's CEO, Heinie Werth said, Malaysia is a key part of Sanlam's future growth strategy and the acquisition of a majority shareholding in MCIS Zurich will entrench its presence in the country.
"We believe that our industry experience and expertise offers us significant opportunity to add value to and build a sustainable business" he said.
Werth added that SEM believes MCIS Zurich is an ideal investment with years' experience in the local market and with an extensive branch network and agency force.
MCIS Zurich's CEO Kevin Jones said the partnership with SEM signals the beginning of a new chapter in the illustrious 60-year history of the company.
"We will face the future with confidence and continue to serve our customers with dedication," he said.
SEM, which also has operations in India and 15 African countries, has a war chest of more than US$370 million (RM1.2 billion) for acquisitions in emerging markets this year.