The potential disposal of AmMetLife by AMMB Holdings (AMMB), if it does materialise, would not come as much of a surprise, in Maybank Investment Bank (Maybank IB)’s view. Nor would it have much of a financial impact on group earnings, by their estimates.
“Positively though, the disposal would enhance the group’s capital ratios. We maintain a Buy on AMMB with an unchanged Target Price of RM4.15,” said Maybank IB.
The press reports that Great Eastern could be in talks to buy AmMetLife Insurance (AML), which along with AmMetLife Takaful, are 50:50 JVs between AMMB and MetLife International Holdings. AML and AML Takaful are the life and family takaful arms of the AMMB group.
That AMMB could be looking to dispose of this unit is not a surprise, especially since the group had, in 2021, partially disposed AmGeneral Insurance to US-based Liberty Mutual Insurance, which was then merged with Liberty Insurance Bhd. AMMB currently holds a 30% stake in the enlarged entity.
The indicated selling price in the press is said to be USD250m-350m. This would value AML at a historical price-book value of about 1.6-1.9x, which is about in line with the valuation that AMMB paid to buy back a 30% stake held by Friends Life in these entities back in 2013, of about 1.7x.
“MetLife then emerged as the new foreign partner when it acquired its stakes in these entities late 2013 for RM812m, which, by our estimates, valued the companies at a price-book value of about 3x, back then,” said Maybank IB.
Maybank IB expects the financial impact from any such disposal to be negligible on AMMB Group’s earnings. AML reported a net profit of RM65.8m in FY23, representing just about 1.9% of AMMB Group’s earnings for its 50% stake.
