SHC Capital sells core insurance business to German firm for $112m

SINGAPORE - Share prices of Catalist-listed SHC Capital Asia shot up 11.5 per cent on Friday after it announced it was selling its core insurance business for $112 million in cash.

Investors cheered the news, buying into the stock to lift its share price by three cents to 29 cents in less than two hours of market activity after a trading halt was lifted at 3.15pm on Friday.

SHC requested a trading halt on Wednesday pending an announcement. It said in April that it was discussing a sale of its insurance business.

It reached an agreement to sell SHC Insurance to German firm ERGO International, which is the primary insurance division of leading global reinsurer, Münchener Rückversicherung.

SHC said the sale price represents a significant premium of about 47.6 per cent over the market capitalisation of the company, generating a gain of some $77.5 million for the company.

The insurance arm recorded a net profit of $8.5 million last year and has a net asset value of $53 million as of Dec 31.

The plan is to distribute at least 30 per cent of the net proceeds of the sale to shareholders through a special dividend.

SHC said in a statement that the deal made sense for both parties.

ERGO will be enter into the direct general insurance market in Singapore, while SHC is able to "to exit the increasingly challenging direct general insurance industry and immediately realise its investment."