--At least three bidders remain in fray for AMMB Holdings
--Southeast Asia is an active area for acquisitions in financial
sector
(Adds background on the deal and insurance in Southeast
Asia)
By Cynthia Koons, P.R. Venkat and Abhrajit Gangopadhyay
Insurers Manulife Financial Corp. (MFC.T), MetLife Inc. (MET)
and ACE Insurance are among the shortlisted bidders for a majority
stake in the life insurance division of Malaysian banking group
AMMB Holdings Bhd. (1015.KU), a deal that could be worth as much as
$600 million, people with knowledge of the sale process said.
The sale is the latest in a string of transactions by foreign
players looking for a piece of Southeast Asia's financial industry.
Banks and insurers from developed markets such as the U.S., Japan
and Canada have been looking to the region, which has a population
of 600 million and boasts a rapidly growing middle class, for
growth rates that they can't match at home.
Malaysia's fifth-largest banking group initiated the bidding in
April, aiming to divest up to 70% of its insurance businesses,
AmLife Insurance Bhd. and AmFamily Takaful Bhd. It is working with
the banking regulator, Bank Negara Malaysia, and aims to complete
the sale in the next three months, the people said.
A representative from Bank Negara Malaysia declined to comment
on the process. Under Malaysian regulations, foreign-equity
ownership in companies is capped at 70%.
AMMB is seeking a partner with insurance expertise to help
expand its profitable insurance business. AmFamily Takaful offers
insurance compliant with Islamic law, meaning policyholders get
dividends instead of interest. It is a valuable offering in
Malaysia, where 60% of the country's 29 million people are
Muslim.
AMMB ended a joint venture with U.K.-based Resolution Ltd.
(RSL.LN) in January after buying back 30% of the two insurance
units for 245 million ringgit ($81 million). European insurers have
been facing increasing pressure at home to boost capital levels and
dispose of noncore assets.
Earlier this month, Japanese insurer Daiichi Life Insurance Co.
agreed to pay around $340 million for a 40% stake in Indonesian
insurer PT Panin Life. In Thailand, Mitsubishi UFJ Financial Group
Inc. is set to buy a 51% stake in Bank of Ayudhya PCL that could be
worth $4 billion, people with knowledge of the deal said last
week.
In January, Canada's Sun Life Financial Inc. teamed up with
Malaysian sovereign-wealth fund Khazanah Nasional Bhd. to buy 98%
of Malaysian life insurer CIMB Aviva Malaysia for $596 million.
Fellow Canadian insurer Manulife was interested in that asset but
lost out in the end, people familiar with the situation said.
Both Manulife and MetLife were interested in ING Groep NV's sale
of its Asian life insurance arm, people familiar with the situation
said, but billionaire Richard Li-the son of Hong Kong's richest
man, Li Ka-shing-ended up buying the highly attractive Hong Kong,
Macau and Thai units.
Life insurance has plenty of room to grow in Southeast Asia, as
a relatively small proportion of the population is insured compared
with some other regions. Life-insurance premiums are expected to
grow by 9.8% in Asia's emerging markets this year, according to
Swiss Re. That's nearly double the 5.2% growth rate the reinsurer
expects in developed Asia and more than four times the 2.2% growth
rate it projects for industrialized countries overall.
Morgan Stanley is advising AMMB on the deal.
--Jason Ng contributed to this article.
Write to Cynthia Koons at cynthia.koons@wsj.com, P.R. Venkat at
venkat.pr@dowjones.com and Abhrajit Gangopadhyayat at
Abhrajit.gangopadhyay@dowjones.com
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