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Report: Malaysia may review ownership rules for foreign insurers

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Report: Malaysia may review ownership rules for foreign insurers

Malaysia regulators are expected to review, and possibly suspend, a directive requiring foreign insurers to cut their stakes in their local insurance units to up to 70%, Reuters reported June 12, citing three people familiar with the matter.

Malaysia's central bank, Bank Negara Malaysia, is likely to review its decision to implement a 70% foreign ownership cap in the local subsidiaries of foreign insurers. Following the issuance of the directive, reports emerged that foreign insurers, including Great Eastern Holdings Ltd. and Prudential PLC, were looking to sell parts of their stakes in their Malaysian units.

Some of the insurers updated the Malaysian central bank after stake sale valuations were below their expectations, Reuters reported.

The report about the potential review of the directive came after the resignations of Bank Negara Malaysia Governor Muhammad bin Ibrahim and the two senior officials at the central bank who were responsible for issues relating to the insurance sector. In Malaysia, insurers are regulated by the central bank.

The central bank could still go ahead with the directive but may relax some conditions, the sources said.

The regulator has not formally informed insurers about the possible review but it is expected to stick to its end of June deadline for getting firms to submit their plans to reduce stakes in their local units by 30%. A decision on the review is likely to be announced after that.

Bank Negara Malaysia did not immediately respond to Reuters' request for comment.