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Great Eastern to buy Indonesia insurance firm for US$28m

GREAT Eastern Holdings is acquiring Indonesia-registered PT QBE General Insurance Indonesia for US$28 million, it announced on Tuesday morning.

Its subsidiary, Great Eastern General Insurance Limited, entered into a share purchase agreement on Dec 10 to fully acquire QBE Indonesia from QBE Asia Pacific Holdings Limited and QBE Insurance (International) Pty Limited. The transaction is expected to be completed in the first half of 2019, subject to approval by Indonesia's financial services authority Otoritas Jasa Keuangan and the Monetary Authority of Singapore.

In a media statement, Great Eastern noted that QBE's history in the Indonesian general insurance market dates back more than 100 years, providing insurance to businesses, professionals and families.

Said Great Eastern group chief executive officer Khor Hock Seng: "The acquisition of QBE Indonesia is part of our broader business strategy to further build our general insurance operations into a significant business pillar for the Great Eastern Group and to deepen our footprint in Indonesia."

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The acquisition will complement the group's existing life insurance presence in Indonesia, he said, noting that with Indonesia’s non-life insurance penetration rate being among the lowest in the region, the market potential "is tremendous". As part of the OCBC Group, Great Eastern "will be leveraging this strong group synergy to create opportunities to better serve the community", he added.

The estimated aggregate consideration of US$28 million for the acquisition, payable wholly in cash, was arrived at following arm’s length negotiations on a willing-buyer, willing-seller basis, based on the book value of QBE Indonesia as at June 30, 2018 with some adjustments and taking into account factors such as the existing assets, financial position and business prospects of QBE Indonesia, said Great Eastern.

The final amount of the aggregate consideration will be based on the book value of QBE Indonesia as at completion, with some adjustments. Based on QBE Indonesia’s unaudited financial statements for the half year ended June 30, 2018, the book value and net tangible asset value of QBE Indonesia is 452 billion rupiah (S$43.1 million).

Great Eastern said the transaction is not expected to have a material effect on its net tangible assets or earnings per share for the current financial year.

Great Eastern shares closed down seven Singapore cents or 0.274 per cent on Monday at S$25.45.