By A. Stephanie
Ramaswamy Athappan
Pacific Insurance is confident of increasing its assets under management to RM1 billion in two years from RM600 million currently.
Following its recent acquisition of MCIS general business, the newly enlarged insurer’s assets under management have swelled from RM400 million to RM600 million.
Pacific is wholly owned by Fairfax Asia, which is in turn a wholly owned subsidiary of Fairfax Financial Holdings Ltd, listed on the Toronto Stock Exchange, Canada.
Speaking to the media after completing the MCIS transaction, Fairfax Asia chairman and CEO Ramaswamy Athappan said: “With this acquisition, we are focusing more on human capital, where its people – employees, agents and brokers – can add value to Pacific.”
The enlarged Pacific will have 300 employees once 120 staff from MCIS general business are absorbed in.
MCIS is a composite company with both and life insurance business and had divested its general business arm pursuant to the Financial Services Act 2013, which does not allow insurers to carry on both life business and general business.
The combined business of Pacific and MCIS general insurance will be around RM400 million in premiums, and Pacific is targeting to increase this to RM1 billion in three to five years.
MCIS recorded more than RM180 million in gross written premiums in 2013 for its general insurance business.
“This transaction comes with an option for Koperasi MCIS to buy into a stake in Pacific up to 7% for a certain price. This is different from Fairfax’s earlier purchases and because of this, the price was considerably lower,” Ramaswamy said.
The CEO refused to divulge the transaction due to confidentiality terms.
Ramaswamy said Fairfax Asia’s Singapore subsidiary is the largest marine hull insurer in Asia. Its Singapore operations contribute 40% to the group’s total revenue.
Fairfax, via Pacific, has launched its bank credit insurance product, and is hoping to bring its expertise in marine hull insurance to Malaysia once local employees have been trained up.
The group also hopes to introduce industrial insurance for Malaysia’s petrochemical and power plant industries in three to four year.
He noted that with MCIS general business merged into Pacific, the group’s Malaysia arm’s 10% contribution to revenue is expected to supersede Singapore’s 40% in three years, on the back of motor and personal line insurance products.
Pacific’s strengths lie in individual medical insurance, and this is expected to expand to other personal line products post acquisition. Personal line products now total RM60 million, or 30% of MCIS premiums.
Besides Singapore, Fairfax Asia currently has a presence in Hong Kong, India, China, Thailand and Indonesia.
The CEO said, “We are looking at opportunities, and may look into acquiring a business in Vietnam. We also see auto insurance – currently making up 25% of Pacific’s business – as a growing segment in the region.
Asked about the impact of goods and services tax (GST) implementation on sales, he said: “Initially there will be a slowdown in take-up but after a while it just becomes part of the cost of doing business.”
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