IAG has agreed to sell its Thai and Indonesian businesses to Tokio Marine, whilst its Vietnamese operation is being acquired by an unknown buyer.
Under the terms of the deal, Japanese carrier Tokio Marine will pay A$525mn ($390mn) for IAG’s 98.6 percent stake of Safety Insurance in Thailand and 80 percent interest in PT Asuransi Parolamas in Indonesia.
Commenting on the deal with Tokio Marine, IAG managing director and CEO Peter Harmer said: “We are pleased to accept the offer for our businesses in Thailand and Indonesia from Tokio Marine.”
“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.”
In addition, IAG also announced that separate to the transactions with Tokio Marine, it had reached an agreement to sell its 73.07 percent interest in AAA Assurance Corporation, based in Vietnam, although it did not reveal the buyer.
It added that the disposal of these three southeast Asian units are expected to have a negligible impact on gross written premium growth and an approximate 50 basis point enhancement to reported insurance margin, owing to their lower earnings profile compared to the rest of the IAG business.
As a result of the combined transactions, IAG said that it expects to make an after-tax profit of at least A$200mn, net of related costs and foreign currency translation reserve effects.
“The sale proceeds from Thailand, Indonesia and Vietnam will be a contributory factor in determining future capital management initiatives. IAG will provide more detail on its capital management intent at its next results announcement in August 2018,” the Australian carrier said in the statement.
Both deals are expected to close in the financial year ended 30 June 2019, subject to regulatory approvals.