HSBC to sell stake in Malaysia insurance unit to FWD

The Asia Pacific insurance unit of HSBC Holdings has received regulatory approval to sell its stake in a Malaysian life insurance joint venture to Hong Kong-based insurer FWD Group.

The United Kingdom-headquartered lender said in a statement late on Thursday it has gotten the approval from the Malaysian central bank to divest its 49% stake in HSBC Amanah Takaful Malaysia Bhd to FWD Life Insurance Company, a subsidiary of FWD. The deal is expected to be completed by June next year.

Other stakeholders within the Amanah Takaful unit are Malaysia’s JAB Capital, which holds a 31% stake, and the Employees Provident Fund Board of Malaysia, with a 20% stake.

HSBC’s Malaysia unit chief Stuart Milne said in the statement that the firm has decided to exit the takaful manufacturing business and focus on its banking operations in Malaysia. The bank added that it would continue to distribute insurance products in that market, and that “Malaysia remains a key insurance distribution market”.

“We will continue to support the insurance needs of our customers, through our insurance partners,” Mr Milne said.

Takaful products are a type of insurance system created to comply with Islamic sharia laws, whereby firms have to adhere to religious guidelines, such as not investing in gambling and alcohol industries.

FWD eyes Southeast Asia growth honey pot

FWD Group is an insurer that has a presence in Asian markets including Singapore, Hong Kong, Macau, Thailand, and Japan. The firm offers products such as life and medical insurance, and general insurance.

According to a Bloomberg report in July, FWD’s owner Hong Kong billionaire Richard Li is said to be considering a listing in Singapore with a dual-class shares structure, as the group prepares for an initial public offering (IPO).

The insurer which was founded in Asia in 2013, is also said to be evaluating its home country for the listing, and the IPO could take place in the next few years. FWD manages more than US$26.6 billion of assets.

Mr Li had said that Southeast Asia has a huge potential for insurance and has seen its insurance business grow by around 30% annually since entering several Southeast Asian markets in the past few years.

The region’s huge population and growing middle class fuels strong demand for insurance products, the tycoon had said.

Other than sweeping up this latest Malaysian deal, FWD recently bagged a controlling stake in an Indonesian insurance unit from the Commonwealth Bank of Australia for US$300 million.

FWD’s backers include Singapore’s sovereign wealth fund GIC, and Asian private equity firm RRJ Capital.