JOHANNESBURG, Dec 2 (Reuters) - A Malaysian subsidiary of South African insurer Sanlam is selling its general insurance business to a unit of Toronto-listed Fairfax Financial Holdings to comply with local law.
Malaysia stipulates that investors cannot operate under more than one life or general insurance licence, unless the second is a sharia-compliant Takaful permit. Sanlam already has a general insurance business in the country through its shareholding in Pacific & Orient.
Sanlam said its MCIS Insurance Berhad arm would sell off its general insurance unit to Pacific Insurance Berhad for an undisclosed amount.
Sanlam acquired a 49 percent stake in Pacific & Orient Insurance for about 814 million rand ($73 million) in 2013. It then went on to buy a majority stake in MCIS for about $119 million in 2014.
“This transaction is part of the realignment of the business and enables us to focus on the life insurance business with MCIS going forward, which is in addition to our existing general insurance interest in Pacific & Orient,” said Heinie Werth, chief executive of Sanlam’s emerging markets operations.
The deal is subject to customary closing conditions and is expected to close in the first quarter of 2015, Sanlam said in a statement.
South Africa’s top insurer by market value has been expanding in emerging markets in Africa and Asia to diversify from its mature home market. (Reporting by Helen Nyambura-Mwaura; editing by Keith Weir)