Bank Negara Malaysia (BNM) Governor, Ms Nor Shamsiah Mohd Yunus, has said that foreign insurers, that have yet to comply with the central bank's requirement to trim their holdings in Malaysian insurance companies, have to advise whether they choose to contribute to a proposed national health insurance fund for the less affluent in the country.
Speaking at a media briefing last week in conjunction with the release of the country's economic performance for the third quarter of 2018, she said, “Each (foreign) insurance company now has been given the option, and they are supposed to revert to BNM with their plans." The choice is between contributing to the national B40 health insurance fund or cutting shareholdings down to at most 70% through a sale or a listing on the stock exchange.
Her comments echoed Finance Minister Lim Guan Eng's statements in an interview last week with the radio station BFM that participation in the B40 Health Protection Fund, targeted at the bottom 40% of the population, is an alternative for foreign insurers looking to maintain their holdings in locally incorporated insurers.
Mr Lim said, "We're giving another option. Instead of divesting the 30% stake held by several parties, we're now giving an alternative so that assistance can be given to the B40 group."
Mr Lim's comments came after Singapore-listed Great Eastern Holdings, which fully owns Great Eastern Life Assurance (Malaysia), confirmed it would contribute MYR2bn ($478m) as seed funding for the fund in lieu of cutting its stake in the local unit by 30%.
Choosing to contribute to the fund is expected to have a neutral impact on the insurance industry due to the illiquid market, reports The Sun Daily citing to analysts.
An insurance analyst said that even if the foreign insurers chose to go for listings, there would not be much impact on the insurance sector as the bulk of the shares are still tightly held by certain investors.
Eleven insurers in Malaysia are at present wholly owned by foreign companies.