Malaysia's second largest pension fund Kumpulan Wang Persaraan (KWAP) is considering investing in foreign-owned insurers in the country, Bloomberg reports.
KWAP CEO Wan Kamaruzaman Wan Ahmad said that KWAP is asking for pitches following inquiries from banks about possibly buying stakes in overseas insurers' Malaysian units.
This comes following news reports that overseas insurers are planning to reduce their stakes in their Malaysian businesses in order to comply with foreign ownership limits.
Bank Negara Malaysia has taken a tougher stance on foreign ownership of insurers to increase local participation in the industry. While foreign ownership of Malaysian insurers was set at 70% in 2009, some foreign insurers operating in the country were allowed to be fully owned by the foreign parent under the proviso that they were able to “facilitate consolidation and rationalisation of the insurance industry”.
However, earlier this year, the central bank enforced the 70% foreign ownership ceiling and requested that the overseas insurers increase local shareholder participation to at least 30%. The overseas firms have until June 2018 to comply with the ruling.
Reuters reported in June that the central bank sent letters to wholly foreign-owned insurance firms, which included the Malaysian units of Japan's Tokio Marine Holdings Inc and Hong Kong's AIA Group Ltd, requesting that their parents adhere to the foreign ownership ceiling.
Meanwhile Bloomberg cites a source as saying that a 30% stake sale in Prudential Malaysia Assurance could raise about MYR3 billion (US$699 million) while a similar sale in Great Eastern Life Assurance (Malaysia) would collect about MYR5 billion. The same source says a 30% stake sale in Tokio Marine Holdings's local unit could raise about MYR1 billion.