PETALING JAYA: MNRB Holdings Bhd

plans to acquire the remaining 80% stake in Labuan Reinsurance (L) Ltd (Labuan Re) that it does not already own for RM400.49mil in cash, a move aimed at strengthening its regional reinsurance and retakaful presence.

In a filing with Bursa Malaysia, the insurance and takaful group said it had entered into a conditional share purchase agreement with 10 shareholders of Labuan Re, including CIMB Bank Bhd, Malayan Banking Bhd

, Public Bank Bhd

, RHB Bank

Bhd, Petroliam Nasional Bhd, Tenaga Nasional Bhd

and Telekom Malaysia Bhd

.

MNRB currently holds a 20% indirect interest in Labuan Re through its wholly owned subsidiary Malaysian Reinsurance Bhd. Upon completion of the acquisition, Labuan Re will become a wholly owned subsidiary of the group.

The proposed acquisition values the 80% stake at US$100.69mil, equivalent to RM400.49mil based on a pre-determined exchange rate of RM3.9775 to the US dollar. The purchase price may be adjusted for distributions paid by Labuan Re before completion.

MNRB said the acquisition would strengthen its position as a regionally competitive reinsurance and retakaful group by leveraging Labuan Re’s offshore platform and international client base.

“The proposed acquisition represents a strategic opportunity for MNRB to strengthen its position as a regionally competitive reinsurance and retakaful group,” the company said.

Labuan Re, incorporated in Labuan in 1992, underwrites general reinsurance and general retakaful business and also participates in Lloyd’s syndicates through its subsidiary. It is regulated by the Labuan Financial Services Authority.

For the financial year ended Dec 31, 2024, Labuan Re posted a net profit after tax and zakat of US$26.66mil, equivalent to RM121.59mil, while its net assets stood at US$197.54mil or RM884.09mil.

MNRB said the acquisition was being undertaken at 0.88 times Labuan Re’s adjusted tangible net asset value, which it noted was below the median valuation multiples of comparable transactions in the global reinsurance sector.

The group expects the deal to improve its earnings profile through the consolidation of Labuan Re’s financial results and the recognition of a potential bargain purchase gain arising from the transaction.

Based on pro forma calculations, MNRB’s net assets attributable to shareholders would increase to RM3.7bil from RM3.44bil, while earnings per share for the financial year ended March 31, 2025 would rise to 86 sen from 50 sen.

The acquisition will be funded through RM150.49mil in internally generated funds and RM250mil via commercial papers.

Following completion, the group’s borrowings are expected to increase to RM1.11bil from RM620mil, raising its gearing ratio to 0.30 times from 0.18 times.

The proposal requires approvals from Bank Negara Malaysia, Labuan FSA, Lloyd’s, non-interested shareholders of MNRB and other relevant parties.

Separately, CIMB Bank Bhd said the disposal aligns with CIMB Group Holdings Bhd

’s Forward30 strategic plan, which focuses on optimising capital allocation, sharpening its core business portfolio and improving operational efficiency.

CIMB, which has held a 10% stake in Labuan Re since 1996, said the divestment would allow the group to redeploy capital into key growth areas to support sustainable financial performance and long-term shareholder value.

The banking group added that the proposed disposal, expected to be completed by the fourth quarter of 2026, is not expected to have a material impact on CIMB Group’s financial performance for the financial year ending 2026.