1 May, 2018
In recent statements, Bank Negara Malaysia ("BNM") has prompted foreign insurers to comply with their commitment to reduce their shareholding in their local units to 70% before a deadline which is reported to be on 30 June 2018.
To recap, in 2009, Malaysia liberalised foreign ownership rules in the financial sector and foreign equity participation in insurance companies and takafuloperators was increased to 70%. A higher foreign equity limit beyond 70% for insurance companies will be considered on a case-by-case basis for players who can facilitate consolidation and rationalisation of the insurance industry.
BNM, in its statements published on 8 March 2018 and 26 March 2018, stressed that foreign insurers were given licences to operate in Malaysia on the basis of specific commitments including maintaining a specified level of domestic shareholding within agreed timelines. BNM expects foreign insurers to honour these commitments.
Amongst some of the insurance companies which are reported to be wholly-foreign owned are Great Eastern Life, Prudential Assurance and AIA.
With the deadline looming, it will be interesting to see how the affected foreign insurers comply with the foreign equity limit in the next two months.
BNM's statements can be found here:
For further information, please contact:
Datin Grace C. G. Yeoh, Partner, Shearn Delamore & Co