Nine months ago Insurance Australia Group said it would be reviewing its Asian operations with a view to perhaps selling them.
IAG decided at the time to stop investing in the area.
Earlier this year sell the company decided to sell and started looking for possible buyers.
Yesterday it told the ASX it would sell its Thai and Indonesian operations to Japanese insurer Tokio Marine Holdings for $525 million.
The Japanese company’s unit, Tokio Marine & Nichido Fire Insurance, will buy IAG’s 98.6% stake in Thailand’s Safety Insurance and 80% of PT Asuransi Parolamas in Indonesia.
“We believe Tokio Marine is an ideal owner given its experience in the region, and that this is a good outcome for the associated employees, customers and other stakeholders,” IAG CEO, Peter Harmer said in yesterday’s announcement.
IAG will also sell its 73% stake in AAA Assurance Corp in Vietnam.
IAG said it expected to book an after-tax profit of at least $200 million in its fiscal 2019 results.
That will see analysts raising the prospect of capital management plans for IAG with the 2017-18 results announcement in August. IAG ran a $300 million buyback in 2016.
Stakes in insurers in joint ventures in India and Malaysia remain on the books (Presumably the joint venture partners have first rights of refusal).IAG also owns a 16.9% stake in Bohai Property Insurance Company Ltd in China.
The sale ends a 12 year strategy to try and build an Asia-wide insurance business. The company wrote down the value of the business by $50 million in the December half because of a lack of performance. The businesses turned in an underwriting loss of $4.6 million in the six months to December 31.
IAG shares closed up 2.4% at $8.42, a record close.
