JAKARTA (TheInsiderStories) – Indonesia’s fifth-largest bank by market capitalization, PT Bank Danamon Indonesia Tbk (IDX: BDMN) announced that it has signed a conditional sale and subscription agreement with Switzerland’s Zurich Insurance Company Ltd., for sales 70 percent shares in its unit PT Asuransi Adira Dinamika (Adira Insurance). The price of the sold shares is around Rp3.9 trillion (US$268.97 million).
Barclays acts as exclusive financial advisor for this transaction.
In a written statement received by TheInsiderStories on Thursday (27/09), the subsidiary engaged in the general insurance segment. It said, in the transaction clause, Zurich will buy 70 percent of Adira Insurance from Bank Danamon and 10 percent from the minority shareholders. The parties expect the transaction, which is subject to regulatory approvals and other customary closing conditions, to be completed within the next six months.
At the same time, Adira Insurance established a strategic partnership with Bank Danamon and PT Adira Dinamika Multi Finance Tbk (IDX: ADMF), another subsidiary of the bank. It said, the strategic partnerships with Zurich will open access for Danamon Group customers to the best range of products from leading global institutions.
Regarding this transaction and partnership, Bank Danamon President Director Sng Seow Wah said, “As part of the Zurich Group, we believe Adira Insurance will continue to grow and provide comprehensive services to customers.”
In another press release Zurich Insurance explained, the transaction includes two separate long-term strategic cooperation agreements with Bank Danamon and with Adira Finance, the country’s second-largest motorcycle and auto financing solutions provider.
The total consideration amounts to Rp6.15 trillion with potential future incremental payments subject to business performance. With this transaction, Zurich will become the largest foreign P&C insurer in Indonesia.
“Zurich has earmarked Asia Pacific to be a major engine of growth for the Group, and Indonesia is a key market for us. We are excited to join forces with Bank Danamon and Adira Finance. Together with Zurich’s international expertise, best-in-class underwriting and risk management capabilities, we are confident in the long-term success of the business,” said Jack Howell, Zurich’s Chief Executive Officer for Asia Pacific in written statement on Thursday (27/09).
Indonesia is one of the world’s most attractive insurance markets. It is Southeast Asia’s largest economy with a strong growth trajectory and a rapidly expanding middle class. These factors, coupled with low levels of insurance penetration, present significant upside potential for the insurance market.
Established in 1996, Adira Insurance generated gross written premiums of $158 million in 2017. This was driven by a diversified P&C product offering and strong distribution capabilities. Adira Insurance has leading market positions in motor and takaful insurance in Indonesia.
Zurich is one of the leading insurance companies in the world, and its investment in Adira Insurance will enable Adira Insurance to utilize financial strength, product expertise and underwriting, as well as Zurich’s digital capabilities for company growth.
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