Wednesday, April 06, 2011

MAA Holdings Hmmm ...

MAA Holdings Bhd owns:

100% MAA Berhad
75% MAA Takaful
100% MAA Corp Sdn Bhd
49% MAA Bancwell Trustee

NST / Kuala Lumpur: MAA Holdings Bhd (MAAH) (1198) is poised to sell 70 per cent of its composite insurance outfit, Malaysian Assurance Alliance Bhd (MAA), to Zurich Insurance Co Ltd for an estimated RM1.2 billion.

An industry source said the deal does not include MAAH's Islamic insurance unit, MAA Takaful Bhd.

However, it is learnt that both parties may talk about the takaful business once the latest deal is concluded.

In 2008, MAAH offered AmAssurance Bhd 4.9 per cent of its Islamic insurance arm as part of a bigger deal to sell its general insurance business. That RM180 million deal had since been scrapped. Zurich Financial Services Ltd (Zurich FS) global corporate business head Geoff Riddell told Business Times two years ago that the group was keen on the takaful business.

"We are still looking at how we can do takaful. I don't consider takaful (proposal) dead," he had said.

Zurich FS' acquisition of MAA may spell the end of its alliance with Koperasi MCIS Bhd through their joint venture, MCIS Zurich Insurance Bhd.

Koperasi MCIS holds a 43.69 per cent stake in the joint venture, while Zurich FS owns 40 per cent.

In 2009, Business Times reported that Zurich FS, Switzerland's biggest insurer, may sell its shares in MCIS Zurich after a failed plan to expand the business had strained relationship between the major shareholders.

"It is well known that Zurich FS has been planning to reposition its operation here since early 2009. It has considered several options, including acquiring an alternative licence and gaining control of another insurer such as MAA," said the source.

Nevertheless, Zurich FS could also merge MAA with MCIS Zurich and retain management control of the enlarged entity, or sell MCIS Zurich and transfer its business and expertise to MAA.

Zurich Insurance's 70 per cent stake in MAA is the maximum allowed under Bank Negara Malaysia's (BNM) relaxed foreign ownership rules.

BNM does not allow insurers to own two insurance companies in Malaysia. This means that Zurich FS must sell its MCIS Zurich's insurance business or merge the insurers.

It is also understood that Zurich FS may have had prior engagement with BNM to explain its intention and address its concerns.

MAA, once the largest locally-owned insurer, is forced to sell its insurance business after reeling from solvency issues and inadequate capital reserve.

It has until August 2011 to raise money to meet BNM's ruling on risk-based capital framework, which requires an insurer to maintain a capital adequacy level that matches its risk profile.

MAAH executive chairman Tunku Datuk Ya'acob Tunku Abdullah is considering refinancing a RM200 million loan or a rights issue.

MAAH shares resumed trading yesterday after it had requested for the suspension last Monday, in response to the recent movement in its share price.

Prior to the suspension, the stock had traded at RM1.05, its highest since December 16 2010.

Yesterday, it fell 6.67 per cent to 98 sen, on a high volume of 33.7 million shares.

As at end of 2010, MAA Holdings has a net asset per share of RM0.94. Its paid up is 304.3m shares. There are no major liabilities that is not covered by its net assets. Hence assuming everything is equal. The RM1.2bn deal, if true, is worth RM1.2bn/303.4m = nearly RM4.00 per share.

Such a gap, makes me wonder if its remotely true at all. Plus according to NST, it does not even include Takaful. I hope its not a typo error, but still even if the deal is RM120m and not RM1.2bn, at RM120m, that's already nearly 40% of the market cap of MAA Holdings.

Surprisingly, though its a "hearsay commentary" by NST, only NST carried it. Trade at your own discretion, I am just putting up the numbers for your consideration.


Announcement made in Bursa's site:



The Company notes the recent movement in its share price and consequentially the request by the Company for the suspension of its shares from trading by Bursa Malaysia Securities Berhad. Further to its announcement of 16 December 2010, the Company remains in discussion with Zurich Insurance Company Ltd as to the possible acquisition of its wholly-owned subsidiary, Malaysian Assurance Alliance Berhad. MAA Holdings Berhad will make the necessary announcements in due course on further developments in relation to the abovementioned.

This announcement is dated 4 April 2011.


Jeff said...

Bro, cannot be typo error. Look at MAA turnover & profits. That should explain all

Jeff said...

Bro, TY has said previously that he wants 300 to 500m for the general insurance business. Now the deal is 70% of MAA that includes the life insurance also. Zurich gets management control hence the premium in the deal. Why the share does not limit up? Cos nobody trust TY as he has cried wolf to many times. So anybody who has the share will dump it. Someone leaked the news thats why the earlier denial. Who benefits most from the deal? TY & gang who holds majority. Cash minus loan of 200m still translates to 1b bal. He will do a Melewar & declare RM2 capital repayment. Again who benefits? MAAH will still have 30% to ride on Zurich minus the headache plus Takaful which he can still sell later. Remain debt free & venture into new business. Still who trust TY? Thats why everybody dump the shares based on lunch time vol of 45m . Who ultimately gain more if the deal goes through? This is a very smart wolf.

William said...

Hard to imagine someone will offer 1.2B when MAA only wanted less than 260M a year ago. Had the structure of MAA Composite Insurance outfit change so much within a year? Perhaps it is the whole plan/deal together with MCIS and capital injection to meet BNM requirement that come to 1.2B. Have to understand the kind of financial reporting we can get in malaysia.

Choong said...

"NST / Kuala Lumpur: MAA Holdings Bhd (MAAH) (1198) is poised to sell 70 per cent of its composite insurance outfit, Malaysian Assurance Alliance Bhd (MAA), to Zurich Insurance Co Ltd for an estimated RM1.2 billion."

The key word here is "POISED"...frankly I dun know the degree of certainty in this word, just like 'non binding heads of agreeement", "MOU"...etc

Just keep my fingers crossed the deal actually materialised as depicted in NST

Otherwise ..another round of mass massacre. Me looking to exit once the price makes a u-turn the mean time just let it run first

Roy said...

ain't touching this.

clearwater said...

The answer to the billion ringgit question lies in one small issue. Who trusts TY? If he had stuck to building the insurance business for the benefit of all shareholders, MAA would be a giant as far as local insurers go. Instead all those so many questionable deals through the years sank MAA. Now, who still trusts TY?

Jeff said...

Clearwater.......since nobody trusts TY & repeated denial normally means there is some truth to the deal. Even if the deal is between 600 to 900m is still big money. TY wants everybody to dump MAA but he is not gonna fool the mkt all the time.
Time will tell. See whether he can redeem himself now. But who trust TY???

jeremy tan said...

hey Dali,
Can you take a look at Fitters? It seems pretty promising.

Jeff said...

I have just cheked bursa disclosure on 11th april & discovered that TY intends to sell 100% of MAAB which holds life & general insurance. Disclosure is as follows:

The Company wishes to announce that the Company has submitted an application to Bank Negara Malaysia (“BNM") on 11 April 2011 for the approval of the Minister of Finance pursuant to Section 67 of the Insurance Act 1996 of Malaysia to enter into an agreement with Zurich for the Proposed Disposal by the Company of their entire equity interest held in the capital of MAAB and the following subsidiary companies to Zurich :

1) Multioto Services Sdn Bhd ;
2) MAAGNET Systems Sdn Bhd (“MAAGNET”) ;
3) Malaysian Alliance Property Services Sdn Bhd;
4) MAAGNET –SSMS Sdn Bhd ( a wholly -owned subsidiary of MAAGNET).

This meets the BNM criteria cos BNM cleary states that for disposal > 70% BNM can consider on a case by case basis.
Hence the NSTP article makes sense. Someone let the cat out of the bag early.

Jeff said...

one more thing....why the deal excludes talaful cos TY cannot make capital repayment like jerneh if MAA has no business at all. Hence MAA must have another business in hand & it may take a long time to materialise. Short cut is distribute surplus cash then sell Takaful to zurich. A very smart wolf. He ain't fooling me on this deal