Kurnia Group
Kurnia: CAB buy to speed up non-motor business
THE STAR - Thursday, November 30th, 2006
PETALING JAYA: Kurnia Asia Bhd's proposed acquisition of Commerce Assurance Bhd (CAB), if successful, will accelerate its diversification into the non-motor business, according to analysts.
Currently motor insurance accounts for more than 90% of Kurnia's revenue.
The general insurer announced on Tuesday that it had received the nod from Bank Negara to begin talks with CAB's parent, Bumiputra-Commerce Holdings Bhd (BCHB), to acquire up to 100% in CAB.
The statement came a day after AMMB Holdings Bhd said it had received the central bank's approval to negotiate with BCHB also for the same company.
"We think if the bid is successful and the price is right, it would help improve Kurnia's investment outlook," an analyst said.
"This will provide an avenue of growth given that it is getting more difficult to grow the car insurance business with the slowdown in car sales," the analyst said.
A Kurnia statement yesterday said CAB was Malaysia's 5th largest non-life insurer with a 5% market share of premiums written.
"Its business mix is 49% motor, 19% marine-aviation-transit, 16% fire and 16% other types of insurance," the statement said.
As at the end of 2005, CAB's total assets and shareholders' funds stood at RM646.7mil and RM184.1mil respectively. For the financial year ended December 2005, CAB made a net profit of RM21.8mil.
The Kurnia group is currently the largest general insurer in Malaysia and South-East Asia, with gross premiums of more than RM1bil.
When contacted by StarBiz, Kurnia Insurans (M) Bhd chief operating officer Kong Shu Yin declined to comment on the announcement, saying that the process was at a "very preliminary stage".