Fortis to Trim Stake in Thai Insurance Joint Venture

Fortis to Trim Stake in Thai Insurance Joint Venture Iris Lai

Belgian-Dutch financial group Fortis [86089] will receive net proceeds of 41 million euros (US $61.4 million) for a transaction that will increase Kasikornbank's shareholding from 10% to 51% in Muang Thai Group Holding, an insurance joint venture in Thailand.

Thai lender Kasikornbank will become a majority shareholder in Muang Thai Group, a holding company of Muang Thai Life Assurance Co. Ltd. [77113], Muang Thai Insurance and Muang Thai Broker. As a result, Fortis will decrease its economic interest in the life insurance business to 31% from 40% and nonlife business to 12% from 15%.

Fortis said it invested 63 million euros in the Muang Thai venture from 2004 to 2008. The insurer will maintain its board representation and management participation in the Muang Thai companies. The transaction is expected to be completed in early 2010 and is subject to regulatory approval.

"We expect Muang Thai, with its broader and stronger shareholder base, to reach the top position in the Thai life insurance market," said Dennis Ziengs, chief executive officer of Fortis Insurance Asia. Fortis will continue to support Muang Thai, especially in the areas of commercial development and actuarial, risk and asset management, he said.

Fortis entered the joint venture in Thailand in 2004 through Muang Thai Fortis Holdings Co., a holding company for the insurance business. The life insurance business reported an average annual growth rate of 24% since 2004, improving its market position from seventh to third with a market share of 8.5%. The nonlife business also increased its market position, from 15th to fifth.

Kasikornbank, formerly known as Thai Farmers Bank Public Co. Ltd., was established in 1945 and is now the fourth-largest bank in Thailand with market share of 14.4% in terms of assets. With 732 branches, the Thai lender has total assets of 1.24 trillion baht (US$37 billion).

In March, Kasikornbank said it will invest up to 7.24 billion baht to increase its stake in Muang Thai Fortis Holdings Co. in a bid to expand its life insurance business (BestWire, March 4, 2009).

Muang Thai Group is controlled by the Lamsam family, which also founded Kasikornbank. After the share transaction at Muang Thai Group, the Lamsam family's shareholding in the holding company will be diluted from 65% to 41% and Fortis from 20% to 7% or 8%, while Kasikornbank will be the largest shareholder with a 51% stake.

(By Iris Lai, Hong Kong bureau manager: [email protected])

(c) 2009 A.M. Best Company, Inc. Belgian-Dutch financial group Fortis [86089] will receive net proceeds of 41 million euros for a transaction that will increase Kasikornbank's shareholding from 10% to 51% in Muang Thai Group Holding, an insurance joint venture in Thailand.