Etiqa likely to enter Indonesia’s insurance market

Malayan Banking Bhd’s (Maybank) insurance arm has signed a deal to acquire a majority stake in Indonesian general insurance company PT Asuransi Asoka Mas (Asoka).(NST.com)

According to sources, the deal aims to leverage on Maybank Indonesia’s more than 400 branches to market Etiqa insurance products. It is believed that the deal was sealed recently, but is subject to regulatory approvals in Malaysia and Indonesia.

“We believe the deal will be completed in the first half of next year,” a source told Business Times. Maybank Ageas Holdings Bhd, the operator of Etiqa, is 69 per cent-owned by Etiqa International Holdings Sdn Bhd, which is a wholly-owned subsidiary of Maybank. “While Asoka is just a small Indonesian insurance player, we understand that Etiqa is acquiring it more for its licence, leveraging on Maybank Indonesia’s extensive network rather than Asoka’s ready-made business,” said the source.

Indonesia has a population of 262 million people and a large untapped insurance market. Although Etiqa’s foray into the Indonesian insurance market may not reap immediate benefits, it will augur well for Maybank and Etiqa in the next couple of years. “We understand that Etiqa is targeting to be among the top five insurance companies in Indonesia in the next five years,” said the source.

Etiqa recorded a net profit of around RM600 million last year, which was 8.8 per cent of Maybank’s total net profit of RM6.8 billion. It is the largest insurance company in Malaysia, and plans to be a major regional player, using Maybank’s extensive network of branches in Asean. The company offers life and general insurance in Malaysia, Singapore and the Philippines. “After Indonesia, we believe Etiqa plans to expand into Indochina, and go for a listing in the next two years when the stock market has better premiums,” said the source. He added that Maybank was not required to announce this deal because it was a relatively small investment at the subsidiary level.

Among Malaysian banks with presence in Indonesia, CIMB Niaga made a net profit of 856 billion rupiah (RM270 million) last year while Maybank Indonesia registered earnings of 1.14 trillion rupiah. CIMB Niaga is the fifth-largest bank in Indonesia in terms of assets, with 17 trillion rupiah.
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