By Cyril Tuohy
MetLife has agreed to seek approval for majority and minority stakes in two life insurance subsidiaries of a Malaysia bank holding company as part of an agreement that includes a long-term distribution deal to sell life insurance through hundreds of banks, the company said.
Under the terms of the proposed transaction, valued at $250 million, MetLife will own more than 50 percent of AmLife Insurance Berhad, with the remaining stake belonging to AMMB Holding Bhd. MetLife will also own less than 50 percent of AmTakaful, with the remaining stake held by AMMB, MetLife said.
In addition, AmLife and AmTakaful will enter into a 20-year agreement to sell life insurance and family Takaful, or Islamic insurance, products through AMMB’s banking subsidiaries AmBank Berhad and AmIslamic Bank Berhad, the company said.
Takaful insurance and investment products conform to Islamic law. Approximately 60 percent of Malaysia’s 30 million people are Muslim. Banking and finance precepts under Sharia law, where all forms of interest are forbidden, operate on the basis of partnership and risk sharing.
Christopher Townsend, president of MetLife’s Asia division said in a news release that the proposed agreement “advances MetLife’s strategy to capitalize on growth opportunities in emerging markets.”
“It is a great testament to our strengths in bancassurance, direct marketing and agency management,” he also said.
Dato’ Dr. Nirmala Menon, head of Designated Markets and Health Asia for MetLife, said Malaysia was an attractive market because of its low insurance penetration and its quickly expanding middle class.
Menon said AMMB customers will benefit from MetLife’s global footprint, expertise, products and services, while MetLife will take advantage of AMMB’s distribution network and brand strength in Malaysia, from which MetLife can expand into other Islamic markets.
Indonesia, Malaysia’s next door neighbor, is the most populous Muslim nation in the world. More than 205 million people, or 88 percent of the nation’s population, are Muslim, according to a 2010 Pew Forum demographic study.
In an investor presentation earlier this month, Townsend said that near-term opportunities for MetLife include expanding the company’s distribution network in Asia, where the insurer earned $920 million in the first three months of 2013, up from $839 million in the first three months of 2012.
More than 85 percent of MetLife’s earnings in Asia come from Japan, with the rest coming from Korea and other Asian markets. Over the next three years, MetLife plans to reduce its reliance on Japan so that by 2016 as much as 10 percent of Asian market revenues will come from outside Korea and Japan, the company said.
MetLife is projecting annual revenue growth in premiums, fees and other revenue in Asia at between 12 to 15 percent, more than double projected annual revenue growth in Japan.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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