PETALING JAYA: The Fairfax Group, which owns Pacific Insurance Bhd and is in the midst of acquiring the general insurance businesses of MCIS Insurance Bhd and Koperasi MCIS Bhd, has picked a candidate to helm its Pacific Insurance operations nationwide.
According to sources, Gobinath Arvind Athappan, also known as Gobi, from Falcon Insurance Co (Hong Kong) Ltd, will take over the reins from Sonny Tan as Pacific Insurance new chief executive officer (CEO) by next month. Falcon Insurance is a unit under the Fairfax Group and writes property and casualty insurance to niche markets in Hong Kong.
A source told StarBiz that an internal memo on Gobi helming Pacific Insurance had been made known to the company’s employees and finer details were being sought out by the management.
Tan, who is near retirement, could be offered a regional posting. As at press time, Pacific Insurance could not be reached for comment.
According to the company’s website, Gobi is the current CEO of Falcon Insurance. He also serves as chief operating officer of Fairfax Asia. He joined Falcon Insurance in 2008 and has been with various companies of Fairfax Financial Holdings (parent company of Falcon) for 12 years, including First Capital Insurance in Singapore and Odyssey America Reinsurance Corp in the United States.
Sources said Gobi was picked due to his vast experience and expertise to ensure the effective merger of MCIS’ general insurance business with that of Pacific Insurance went according to plan.
Canada-based Fairfax Group entered the Malaysian insurance scene when Fairfax Asia Ltd acquired Pacific Insurance from PacificMas Bhd for RM216.5mil at 1.6 times book value in 2011.
At the moment, the value of the transaction for the general insurance businesses of MCIS Insurance and Koperasi MCIS, which will be done via Pacific Insurance, is not known. The acquisitions are expected to be completed by the current quarter.
Although there has been no indication of the seller of the MCIS businesses, StarBizhad earlier reported that the seller was South Africa-based Sanlam Group.
Sanlam Group unit, Sanlam Emerging Markets, had in April last year acquired 51% in MCIS, then known as MCIS Zurich Insurance Bhd, from Koperasi MCIS for about US$118.4mil (RM387.6mil) at a price-to-book value of 1.7 times.
The average valuation for general insurers, according to analysts, is generally lower at 1.9 times price-to-book compared to life insurers at 2.8 times, adding that much of this would depend on the niche and value an insurer has to offer.
Some key factors that would decide the price an acquirer is willing to pay for the insurance assets would be the existence of a captive market, bancassurance, economies of scale and whether it fits strategically in the insurers’ future plans in a particular market.