Insurance Australia Group is set to sell its four Southeast Asian businesses in deals that could be valued at about US$500 million, under a review of its Asian operations, reports Reuters citing three people with knowledge of the matter.
IAG, Australia's biggest general insurer by market share, has ventures in Malaysia, Thailand, Vietnam and Indonesia in Southeast Asia, and could complete the sale process by the third quarter, the people said.
Despite years of investments, Asia has proved a challenge for IAG. The insurer posted an underwriting loss in Asia of A$6 million ($4.63 million) in its fiscal first half of 2018, although that loss narrowed from A$9 million in the second half of 2017. Asia's overall earnings contribution decreased to A$10 million in 2017 from A$26 million a year earlier.
A spokeswoman for IAG in Australia said the insurer had announced plans to review Asia strategy, not to exit the region. She declined to comment on whether the company had made a decision to exit those specific markets.
IAG also operates in India and owns a 16.9% stake in Bohai Property Insurance Company Ltd in China.
IAG said in February that it was reviewing its Asian operations in the face of a lack of buying opportunities to boost growth in a region attractive for its low penetration rates but which is also very competitive.
IAG owns a 49% stake in its Malaysian venture, AmGeneral Holdings, the general insurance arm of AmBank Group. It has a 99% stake in Thailand's Safety Insurance, according to its February investor report.
The insurer also holds an 80% stake in Indonesian non-life insurer PT Asuransi Parolamas and 63% of AAA Assurance Corp in Vietnam.
Malaysia and Thailand account for the bulk of its premium income in Southeast Asia, said one of the people with knowledge of the matter.