Singapore's Great Eastern Holdings is said to be exploring selling its stake in its Malaysian operations for as much as US$1 billion.
Great Eastern is among several foreign insurers which are preparing to sell large stakes in their Malaysian operations to comply with a central bank requirement for the country's insurance companies be at least partially owned by local players, according to a report by Dow Jones Newswires.
British life insurer Prudential and Japan's Tokio Marine Holdings are talking to bankers about how to sell close to a third of the shares in their Malaysian subsidiaries, sources told the news agency. The options being considered include strategic stake sales or initial public offerings in Malaysia.
Foreign insurance companies are facing a June 2018 deadline to comply with the rules, which were set by Bank Negara Malaysia, the country's central bank. The share sales by these and other foreign insurers could raise almost $3 billion in total over the next nine months, one of the people said.
Many insurers started wholly-owned subsidiaries in Malaysia years ago on the understanding that they would eventually comply with a 2009 rule that capped foreign ownership of local insurance companies at 70%. That means at least 30% of insurance companies have to be held by domestic investors. The government earlier granted various foreign insurance companies exemptions from the rule.