Insurance Australia Group (IAG). Australia's largest insurer, is selling out of its most of the Asian business including Thailand, Indonesia and Vietnam following a strategic review of the region.
The company today announced the $525 million sale to Tokio Marine & Nichido Fire Insurance of IAG’s operations in Thailand and Indonesia.
IAG, which specialises in motor and property insurance, has invested about A$850 million in the region since 1998 and has a presence in five Asian markets – Thailand, Vietnam, Indonesia, Malaysia and India.
The agreement covers IAG’s 98.6% of Safety Insurance in Thailand and 80% of PT Asuransi Parolamas in Indonesia.
Separately to the deal with Tokio Marine, IAG has reached an agreement to sell its 73.07 percent interest in AAA Assurance Corporation, based in Vietnam.
All the transactions are expected to conclude in the financial year ended 30 June 2019, subject to regulatory approvals.
“We are pleased to accept the offer for our businesses in Thailand and Indonesia from Tokio Marine,” said IAG managing director and CEO Peter Harmer. “We believe Tokio Marine is an ideal owner given its experience in the region, and that this is a good outcome for the associated employees, customers and other stakeholders.”
Tokio Marine forms part of Tokio Marine Holdings, the largest property and casualty insurance group in Japan, with operations in 38 countries.
IAG is currently going about simplifying its business, by consolidating technology platforms, harmonising products, and simplifying processes and systems.
IAG earlier revealed that the Asian division contributed a profit of A$15 million in the six months to 31 December 2017, compared to A$2 million in the corresponding period the previous year. The increase is attributed in part to recovery in Thailand and growth in India.
The company in a statement earlier had said that as part of its Asia strategy, it has focused on growth via market consolidation and increased ownership. IAG’s current assessment is that such opportunities are limited, resulting in its decision to conduct a strategic review of the options available for its Asian businesses.
“This has been prompted by an inability to make progress on our long-standing ambition of growing our preferred markets either by way of increased ownership or participation in industry consolidation,” Hammer had said.