The Ayudhya Insurance PCL (AYUD) and CIMB Thai Bank PCL announced today that they have entered into an agreement for AYUD to acquire a 99.99% stake in BT Insurance Co Ltd (BTI) from CIMB Thai at an initial reference price of THB392 million. The final sale price will be determined at the closing date of the transaction, based on adjustment clauses in the agreement. The transaction is expected to complete by June this year.
Concurrently with the sale, AYUD will enter into a 10-year bancassurance agreement with CIMB Thai branches and subsidiaries to sell existing BTI and AYUD non-life insurance products at all CIMB Thai branches in the country.
Mr Rowan D’Arcy, President and CEO of AYUD said: “AYUD's Board of Directors has unanimously approved the acquisition of BTI. This purchase will strengthen AYUD's market position to better leverage the opportunities available in the Thai insurance market.”
Mr D’Arcy explained: “In Thailand, the rate of non-life insurance penetration is still low compared to other Asian countries. Considering the positive long-term economic growth trend and the government’s continuing policy to promote insurance through various measures, we believe there’s a bright future for the insurance industry. AYUD intends to be among the first to build on these opportunities. By acquiring BTI, we automatically increase our share of the non-life insurance market where we are already successful.”
For CIMB Thai, this sale is in line with CIMB Group’s regional strategy to leverage on the expertise of top insurance companies and focus on its strong distribution capabilities. “We will focus on our ability to bring a wide range of innovative insurance products and services to our customers via our 147-branch network nationwide,” said Subhak Siwaraksa, President and CEO of CIMB Thai.
Subhak added: “With tighter regulation and heightened competition in the insurance industry, only the top players will be able to continuously innovate and grow their business. While BTI is a profitable company with strong management, its business fits perfectly with that of a strong player like AYUD. AYUD, a listed company, is one of Thailand’s leading non-life insurance companies, with a track record spanning 60 years. We look forward to a productive bancassurance partnership with them.”
Both AYUD and BTI will continue to operate as usual until the acquisition is completed. All insurance policies with BTI will be honoured in accordance with the agreed terms, and claims will be handled following the usual terms and procedures. BTI customers with policies that are due for renewal will be contacted by their account managers on policy renewals and transfers. Customers can also contact their account manager or call the BTI hotline at: 0-2657-1672.
This transaction is subject to the approval of the Office of the Insurance Commissioner and the shareholders of AYUD.
“Through this acquisition, both AYUD and BTI will achieve greater synergies while our customers will experience more convenient access to our extensive service and products. We are confident of providing better return on investment to investors and mutual benefits to all stakeholders,” said Mr D’Arcy.
About Ayudhya Insurance Public Company Limited
Established since 1950, Ayudhya Insurance Public Company Limited (AYUD) is a leading non-life insurance company in Thailand. It offers a wide range of non-life insurance products ie fire, marine, motor and miscellaneous insurance. The company has 18 branches, serving Thailand with 350 employees. In October 2009, AYUD made history with a double-win for the
First Prize, Prime Minister Award for Best Management in 2007 and 2008. It also received a prestigious award from the Netherlands Thai Chamber of Commerce for The Most Innovative Product in 2009.
About CIMB Thai
CIMB Thai is a commercial bank in Thailand with 147 branches across the country offering a wide range of financial solutions to both retail and corporate customers. It also offers stockbroking and corporate advisory, mutual funds, wealth management and insurance products and services through its subsidiaries.
CIMB Thai, formerly known as BankThai, became a part of CIMB Group in 2009, when CIMB Group acquired 93.15% of its shares. As at 30 September 2009, CIMB Thai’s total assets and shareholders’ funds were THB126 billion and THB 7.7 billion respectively.