SINGAPORE (S&P Global Ratings) Oct. 4, 2023--Great Eastern Holdings Ltd.'s Malaysian subsidiary-led proposed acquisition of AmMetLife Insurance Bhd. (AML) and AmMetLife Takaful Bhd. (AMT) will enhance its market leadership within the Malaysian insurance and takaful market.
The Singapore-based Great Eastern group is using its Malaysian subsidiaries--Great Eastern Life Assurance (Malaysia) Bhd. (GELM) and Great Eastern Takaful Bhd. (GETB)—for the proposed acquisition of AML and AMT from AMMB Holdings Bhd.
The addition of AML and AMT's insurance and wealth protection solutions will supplement the Great Eastern group's product offerings. Their exclusive 20-year distribution partnership for all their Malaysian life insurance and family takaful products through AMMB's banking subsidiaries' network will increase the group's accessibility within Malaysia.
We expect Great Eastern group's prospective capitalization after the proposed acquisition to remain robust, benefiting from healthy profitability and high profit retention. As of June 30, 2023, Great Eastern group's shareholders equity stood at Singapore dollar (S$) 7.4 billion, with a profit after tax of S$445.2 million, based on International Financial Reporting Standards 17.
We anticipate Great Eastern group will use cash from GELM and GETB to fund the proposed acquisition and the exclusive distribution partnership, which amount to Malaysian ringgit 1.21 billion (S$352 million). This is modest relative to the Great Eastern group's financial resources.
We expect solvency at GELM and GETB to remain well above the regulatory minimum requirement, despite a slight decline after the proposed acquisition. In our view, the group has the financial resources and earnings capacity to absorb the acquisition cost while maintaining its robust capital position. Based on our estimates, the combined assets of AML and AMT represented 1.5% of Great Eastern group's total assets as of end-2022.
GELM is the largest life insurer and GETB is among the top five takaful companies in Malaysia. The completion of the proposed transaction is subject to regulatory approvals.
Related Research
This report does not constitute a rating action.
Primary Credit Analyst: | Trupti U Kulkarni, Singapore + 65 6216 1090; trupti.kulkarni@spglobal.com |
Secondary Contact: | Billy Teh, Singapore + 65 6216 1069; billy.teh@spglobal.com |
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.