IAG will exit its Malaysian insurance joint venture and receive sale proceeds of around $340 million under a proposed deal expected to be completed this financial year, as the insurer completes its retreat from Asia.

Joint venture AmGeneral Holdings Berhad, owned 49% by IAG and 51% by AMMB Group (AMBank), will be acquired by Liberty Insurance Berhad following an agreement announced today.

Liberty will acquire all the shares in AmGeneral under the proposed share purchase transaction, with AmBank to end up holding a 30% interest in the insurance operations, while IAG exits.

The deal is conditional on the Malaysian High Court approving a capital reduction and distribution of sale proceeds to IAG and is subject to clearances from Bank Negara Malaysia and the Minister for Finance.

IAG entered Malaysia in 2006 through an initial 30% interest as part of a previous Asia expansion strategy that also targeted India, Thailand, Vietnam, Indonesia and China.

In 2018 the company launched a strategic review of the region’s businesses, leading to the sale of interests in India, Thailand and Indonesia. The Malaysian joint venture was its largest remaining investment in Asia, while it still has small interests in China and Vietnam.

IAG expects to incur a loss of about $90 million for amortisation and impairment related to the Malaysian exit in the fiscal 20021 results, reflecting adjustments for the asset being recognised as “held-for-sale”.

The transaction is expected to result in an increase in IAG’s regulatory capital position of about $150 million at completion.