Malaysian Regulator Assumes Control of Tahan Insurance

Bank Negara Malaysia, the Malaysian central bank and financial regulator, has taken over control of Tahan Insurance Malaysia Bhd [89143] for failing to comply with capital requirements.

The regulator said it was ordered by the Ministry of Finance to assume control of the nonlife insurance company, which also failed to fulfill capital restoration plans. "The primary objective of the order is to safeguard the interests of Tahan's policy owners," said Bank Negara.

Tahan, a wholly-owned nonlife subsidiary of Idaman Ungull Bhd, has a market share of 1% in Malaysia's nonlife insurance sector.

Business operations of Tahan will proceed as usual during the takeover period, said Bank Negara. The regulator has appointed Soon Keong Phoon, executive director at PricewaterhousecCoopers Capital, to take charge of Tahan.

Bank Negara said Phoon will oversee "the whole of property, business and affairs" of Tahan to ensure smooth operations of the company's activities while assessing the "least-cost solution for an effective resolution to take place."

Tahan has 19 branches in Malaysia and it underwrites all classes of nonlife business such as motor vehicle, marine cargo and hull, homeowners, accident and hospitalization.

Its holding company, Idaman, sold the life subsidiary of Tahan to Axa Affin Life Insurance Bhd [78840] for 121 million ringgit (US$34.3 million) in June 2006.

Idaman had held talks with various insurance companies to sell shares of its nonlife unit, which was established in 1973 under the name of Talasco Insurance Bhd.

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