Bumiputra-Commerce Holdings Berhad ("BCHB") today announced its proposal to sell a 49% equity stake each in Commerce Life Assurance Berhad ("Commerce Life") and Commerce Takaful Berhad ("Commerce Takaful") as well as 100% of Commerce Assurance Berhad ("Commerce Assurance"), for a total cash consideration of RM990 million. These sales are in line with BCHB's decision to strengthen its customer value proposition in insurance products and services and focus on core competencies. 

In September 2006, BCHB undertook an extensive RFP process to select suitable partners for its insurance businesses. BCHB Chief Executive Officer, Dato' Nazir Razak, said," The response to our RFP was very encouraging with attractive bids from various global bancassurance players. We are pleased with the outcome which we regard as very positive testimony to the potential of our new universal banking franchise and the Malaysian insurance market as a whole."

1.             New partner for Life and Takaful businesses

BCHB today announced that it has accepted an offer from Aviva Asia Pte Ltd ("Aviva") for its sale of a 49% equity interest in each of Commerce Life and Commerce Takaful for a total cash consideration of RM500 million. In conjunction with the proposed sale, Commerce Life and Commerce Takaful will also enter into a bancassurance agreement with CIMB Bank Berhad ("CIMB Bank") for the distribution of life and takaful insurance products through CIMB Bank branches throughout Malaysia. The proposed sale and bancassurance agreement are subject to finalisation of terms and conditions and receipt of all regulatory approvals such as Bank Negara Malaysia, the Minister of Finance and Foreign Investment Committee.

Dato' Nazir said, "As a Universal Bank, we need to be able to offer a full suite of products to our customers, and we realise that there is significant room to grow our bancassurance value proposition. Through this exercise, we can begin to unlock and fully realise the potential of our life and takaful businesses and bancassurance operations. We see a greater contribution to the Group from our insurance and bancassurance segments in the coming years."

BCHB aims to leverage on its diversified customer base, extensive network and distribution channels to help grow its insurance businesses and bancassurance operations. CIMB Bank currently has a large network of 383 branches nationwide and over 4.5 million customers which it can tap.

Dato' Nazir added, "We are happy to have found in Aviva, a partner who shares the same vision as us. Together with Aviva, we are confident that we can accelerate growth as a leading life insurance and takaful provider in Malaysia and become a long term leader in the bancassurance space. Aviva's proven track record in bancassurance, as well as its world-class operational model, reputation for innovation and technical expertise, will complement CIMB Bank's distribution strength and local know-how and enable BCHB to achieve a "˜quantum leap' in productivity and profitability in this segment."

2.             Disposal of General Insurance business

BCHB also announced that it has accepted an offer from Allianz Group ("Allianz") for its proposed sale of its entire equity interest in Commerce Assurance for a total cash consideration of RM490 million. As part of the transaction, CIMB Bank will enter into an agreement with Commerce Assurance and Allianz to form a strategic alliance to distribute general insurance products through CIMB Bank. The proposed sale and bancassurance agreement are subject to finalisation of terms and conditions and receipt of all regulatory approvals such as Bank Negara Malaysia, the Minister of Finance and Foreign Investment Committee.

This is in line with BCHB's decision to focus on life insurance and takaful businesses which are synergistic with its universal banking model. However, the strategic alliance with Allianz will still allow for BCHB to earn income from products sold through CIMB Bank's distribution channels. 

Dato' Nazir said, "Allianz will be CIMB Bank's preferred provider of General Insurance products. They are familiar with the local market and have the global expertise and know-how to provide the right solutions to our customers. BCHB's distribution capabilities coupled with Allianz's marketing expertise and staff training excellence would make for a formidable partnership and enhance potential cross-selling opportunities."

3.             Impact on BCHB's financials

BCHB expects the transactions to contribute approximately RM650 million to the Group's net profit for 2007. This translates into additional net earnings per share of approximately  20sen. For the 9 months to September 2006, the profit of Commerce Life, Commerce Takaful and Commerce Assurance were RM6.8 million, RM623,000, RM19.8 million respectively whilst the NTA of the respective companies were RM103.8miilion, RM100.6 million, RM181.3 million.

BCHB expects the transactions to be completed by the second quarter of 2007 and will make a detailed announcement upon the signing of a definitive agreement on the sale of insurance businesses.