KIMB Disposal

It has been announced today that Kurnia Insurance (M) Bhd (KIMB), the biggest Motor Insurance Company in Malaysia will be sold to AmG (JV company between Am Group (51%) and Australia Insurance Group - AIG (49%) ). it is speculated that the sale price will be at 2.5 to 3 times of KIMB's book value (BV) of RM720 mil. Recent sales of insurance business in Malaysia is transacted at following price:

1. Jerneh Ins sold to ACE - 2.24 times BV
2. Berjaya Sampoe Ins sold to Japanese - 3.3 times BV
3. Pacific Ins sold to Fairfax - 1.5 times BV
4. MAA Ins sold to Zurich - 1.35 times BV

KIMB being the biggest motor insurer should command a BV above 2x based on the recent transaction. The speculated price of 2.5x to 3x is fair. Motor insurance business is a tariff business where the premium charged is controlled by BNM. The premium rate has been not raised for a very long time. The emergence of buyer at 2.5 x BV is an indication that the motor insurance premium is going up soon.

A quick analysis of potential upside for short term gain:

















There is a potential speculative upside of another 50% or 30sen/share. Good luck.

Another important person to follow: Jean-Michel Six

Jean-Michel Six, the chief economist of Standard & Poor, is the man to be watched closely in near term. World capital market, especially equity market is volatile at the moment due to unconcerted effort by the EU leadership in tackling the Euro Zone debt crisis. There is a lot of dilly-dally at the moment in decision making process. Jean is hinting risk of further downgrade in Euro Zone economic power house - France and Germany.

Dec 12 (Reuters) - The European Union will need more summits to resolve its debt turmoil and time is running out, although last week's deal was a significant step in resolving a "crisis of confidence", the chief economist of S&P Europe said on Monday.

"Let's not raise expectations too high, there will be more summits," the ratings agency's official Jean-Michel Six told a business conference in Tel Aviv. "Time is running out and action is needed on both sides of the equation, on the fiscal and monetary side."

The agency, which placed 15 euro zone countries on watch for a potential downgrade ahead of Friday's summit, wanted to send a strong signal that the countries were facing significant risk of a major recession next year and a credit crunch, Six said.

"There is probably yet another shock required before everyone in Europe reads from the same page, for instance a major German bank experiencing difficulties in the market," Six said. "Then there would be a recognition that everyone is on the same boat and even German institutions can be affected by this contagion."