SINGAPORE - Great Eastern Holdings (GEH) on Monday (Nov 5) said that it is in discussions with the Malaysian authorities on possible options to enable its unit, Great Eastern Life Assurance (Malaysia) Berhad (GELM), to satisfy prevailing foreign ownership requirements applicable to insurance companies in Malaysia.
Such options include GELM making a certain contribution to a special insurance development trust fund which may take the form of a B40 Health Protection Fund.
GEH said: "The discussions on the options are on-going at this stage and details have yet to be finalised. Based on the options currently being considered, GEH believes there will not be a material impact on the earnings of GELM and GEH."
This stands in contrast to Malaysian news reports that on Saturday (Nov 3) cited Finance Minister Lim Guan Eng as saying in his Budget 2019 speech that Great Eastern Life Insurance has already agreed to contribute the initial seed funding of RM2 billion (S$659 million) to this fund, which will be managed by Bank Negara Malaysia.
"We are grateful to Great Eastern Life Insurance for agreeing to contribute the initial seed funding of RM2 billion to this fund to be managed by Bank Negara Malaysia. We are expecting the fund size to grow with more partnership and contributions with other insurance companies," Mr Lim had said in his speech.
In 2017, Bank Negara ordered foreign insurers to reduce their stakes in Malaysian-incorporated insurance firms to comply with a 2009 rule, putting a 70 per cent cap on foreign ownership of local insurance businesses.
As a result, many global insurers such as Japan's Tokio Marine Holdings, Hong Kong-based AIA Group, Great Eastern Holdings, Prudential, Zurich Insurance and Chubb were reportedly looking into divesting 30 per cent of their Malaysian business to local state-linked funds or listing the local units.
But last month, one media report, quoting sources, said the new Malaysian government was getting ready to review the foreign ownership rule as it looked to roll back several of the previous administration's reforms that were highly controversial.