Insurer still looking for right partner
New Straits Times, 17 February 2001.
GENERAL insurer Pacific & Orient Insurance Co Bhd is "careful" in its choice of partners for mergers or acquisitions.
The partners have to match the operations and culture of the company, said the chief executive officer of parent company Pacific Orient Bhd, Chan Thye Seng.
Chan said both local and foreign partners are welcome, as long as they can enhance its value.
"Our eyes and ears are open. If it is a foreign company, we can learn from them," he said.
Another factor which Chan takes into consideration in an acquisition exercise is the reduction of staff.
"We take this matter seriously" he said after the company's annual and extraordinary general, meetings in Kuala Lumpur yesterday.
He said the company had not written to Bank Negara Malaysia to initiate any talk for possible mergers or acquisitions.
"We need to have something on the horizon before doing this. But there is nothing firm at the moment."
He was referring to the consolidation programme which involves, 52 general insurers and 17 life insurance companies operating in the country.
Pacific & Orient Insurance, recently increased its paid-up capital to RM100 million to meet the minimum capital requirement for insurance companies.
Chan said the group expects its insurance business to increase its turnover by about 15 per cent this financial year.
But Chan was quick to point out that high revenue does not mean a high profit for the company.
For the financial year ended Sept 30, 2000, Pacific & Orient Insurance registered a turnover of RM143.3 million.
At group level, turnover was RM151.1 million.
He expects a marginal increase in the group's pre-tax profit for the current year as, according to him, business could be difficult in the second half of the company's financial year.
Last year the group posted a pre-tax profit of RM19.5 million.
Chan also said the group's IT unit, P&O Global Technologies Sdn Bhd. (POGT) is growing. He is hopeful the unit will be a strong pillar soon.
He expects the division to break even within the next two years, and hopes it will record a revenue of RM14 million.
POGT posted a pre-tax loss of RM10.1 million last year, primarily due to its restructuring costs.
Its turnover was RM13.5 million.
To realise the targetted revenue, Chan said P&O Technologies Sdn Bhd is introducing some hew products this year.
He said The PelicanSuite family of products which attracts the banking sector will be extended to the legal profession and credit collection companies.
Another new product, ClaimsFlow, a claims management solution for insurers will soon be offered to regional countries.
"We have the connectivity to do that as the company is well equipped with expertise," Chan said.
He said POGT has about 35 development engineers and 20 support staff to ensure that these will be achieved.
At the extraordinary general meeting yesterday, the group's shareholders approved the proposed purchase by the company of its own shares.
Chan said the group had not exercise, the share buyback but will take the approval as a precaution.
"It may not happen, but if it's a return to shareholders, we'll do it," he said.
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