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Malaysian insurance market to see further M&As

Posted on January 24, 2013, Thursday

KUCHING: With the move to risk-based capital (RBC) and market liberalisation well underway, the Malaysian insurance sector is poised for a flurry of activities and consolidation, an entry into one of the world’s most potentially lucrative markets.

A second wave of mergers and acquisitions in the insurance and takaful markets is about to get underway, linked to a new regulatory requirement and new strategies, Oxford Business Group (OBS) highlighted in its Malaysia Report.

This followed a first wave that came after the insurance authorities moved to implement RBC requirements for conventional insurers.

In 2012, the RBC regime was extended to Islamic insurance as well as players, giving fresh impetus to market consolidation going forward, it pointed out.

Bank Negara Malaysia’s 2011 statistics showed that there were 27 Malaysian-incorporated conventional direct insurers operating in the country, with three Malaysian-incorporated and four foreign incorporated reinsurers.

There were also 37 insurance brokers, 36 adjusters and 17 financial advisors in operation.

The number of direct insurers fell from 39 in 2010, while all other numbers had remained constant.

OBG pointed out that the decrease was part of a wave of mergers and acquisition activities in the sector after the introduction of RBC in 2009, although numbers had been declining historically.

In 2008, there were 42 direct insurers, while in 1990, there were 57.

The central bank figures further showed that the premium income in the sector overall was RM36.65 billion in 2011, up from RM31.932 billion the year before.

The 2011 figure was equivalent to 4.1 per cent of gross national income, down from 4.3 per cent and 4.4 per cent in 2010 and 2009 respectively.

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