PROPOSED DISPOSAL BY MAAG OF ITS ENTIRE 75% EQUITY INTEREST IN MAA TAKAFUL BERHAD TO ZURICH INSURANCE COMPANY LTD; AND

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1 MAA GROUP BERHAD ( MAAG OR THE COMPANY ) PROPOSED DISPOSAL BY MAAG OF ITS ENTIRE 75% EQUITY INTEREST IN MAA TAKAFUL BERHAD TO ZURICH INSURANCE COMPANY LTD; AND PROPOSED SPECIAL DIVIDEND OF RM0.35 EACH. 1. INTRODUCTION On behalf of the Board of Directors of MAAG ( Board ), KAF Investment Bank Berhad ( KAF IB ) wishes to announce that MAAG together with Solidarity Group Holding BSC (Closed) ( Solidarity ) (collectively, the Vendors ), had on 4 May 2016 entered into a conditional share purchase agreement ( SPA ) with Zurich Insurance Company Ltd ( Zurich or Purchaser ) for the proposed disposal by the Vendors of the entire 100,000,000 ordinary shares of RM1.00 each in MAA Takaful Berhad ( MAAT ) ( Sale Shares ) representing 100% equity interest in MAAT for a total cash consideration of RM525.0 million to the Purchaser, in accordance with the terms and conditions of the SPA and subject to certain adjustments as set out in Section of this Announcement ( Adjustments ) under which, inter-alia, MAAG shall be disposing of 75,000,000 ordinary shares of RM1.00 each in MAAT (representing 75% equity interest in MAAT) for a cash consideration of RM million, in accordance with the terms and conditions of the SPA and subject to the Adjustments ( Disposal Consideration ) ( Proposed Disposal ). MAAG had, on 26 April 2016, obtained the approval of the Minister of Finance Malaysia, vide Bank Negara Malaysia ( BNM ) s letter dated 27 April 2016, for the Proposed Disposal pursuant to Section 101 of the Islamic Financial Services Act, Subsequent to the completion of the Proposed Disposal, the Board proposes to declare an interim special dividend of RM0.35 for each ordinary share of RM1.00 in MAAG ( MAAG Shares ) held by the shareholders of MAAG whose name appear in the record of depositors of Bursa Malaysia Depository Sdn Bhd ( Entitled Shareholders ) on an entitlement date to be determined and announced later by the Board ( Entitlement Date ) ( Proposed Special Dividend ). The total amount under the Proposed Special Dividend shall be payable out of the Disposal Consideration. The Proposed Special Dividend is conditional upon the Proposed Disposal but not vice versa. The Proposed Disposal and the Proposed Special Dividend are collectively referred to in this Announcement as the Proposals. The Proposed Disposal is a major disposal transaction, meaning the disposal of all or substantially all of a listed corporation s assets which may result in the listed corporation being no longer suitable for continued listing on the Official List of Bursa Malaysia Securities Berhad ( Bursa Securities ) pursuant to paragraph 10.11A of the Main Market Listing Requirements issued by Bursa Securities ( Listing Requirements ). Accordingly, the Board has appointed KAF IB as the Principal Adviser and TA Securities Holdings Berhad ( TA Securities ) has been appointed to act as the Independent Adviser to provide an opinion to the Directors and shareholders of MAAG on the fairness and reasonableness of the Proposed Disposal, and on whether the shareholders should vote in favour of the Proposed Disposal. Further details of the Proposals are set out below. 2. THE PROPOSED DISPOSAL 2.1 Details of the Proposed Disposal MAAG, together with Solidarity, had, on 4 May 2016, entered into the SPA with Zurich for the proposed disposal of the Sale Shares representing 100% equity interest in MAAT for a total cash consideration of RM million of which RM million and RM million shall be paid to MAAG and Solidarity respectively in accordance with the terms and conditions of the SPA and subject to the Adjustments. 1

2 Upon the completion of the Proposed Disposal, MAAT will cease to be a 75%-owned subsidiary of MAAG. 2.2 Basis of arriving at the Disposal Consideration The Disposal Consideration was arrived at on a willing buyer willing seller basis and after taking into account the following financial considerations:- (c) MAAT s net assets ( NA ) of RM116.8 million based on its audited financial statements as at 31 December 2014; a premium of RM4.08 above the audited NA per ordinary share of RM1.00 each in MAAT as at 31 December 2014 of RM1.17; and an implied price-to-book ratio ( PBR ) of approximately 4.49 times based on the audited NA per ordinary share of RM1.00 each in MAAT as at 31 December 2014 of RM1.17. The Board is of the view that the Disposal Consideration is reasonable in view that the PBR for the Disposal Consideration is above the range of the transacted PBR of several selected precedent transactions undertaken by comparable insurance and takaful companies listed on Bursa Securities ( Comparable Companies ) for the past two (2) years as set out below. These Comparable Companies have been selected for illustration purpose only and may not be directly comparable to MAAT due to various factors which include, amongst others, the type of insurance or takaful business classes carried on and coverage of business activities, scale, profit track record, financial strength, risk profile and future prospects. Comparable Companies Multi-Purpose Insurans Berhad Name of acquirer Generali Asia N.V. Principal activities Underwriting of all classes of general insurance business Date announced/ completed / Transaction consideration PBR (RM million) (times) Uni.Asia General Insurance Berhad Liberty Seguros, Compania de Seguros y Reaseguros, S.A. Underwriting of all classes of general insurance business / AmLife Insurance Berhad MetLife Inc Provides a comprehensive range of life insurance and wealth protection solutions which are distributed through AMMB Holdings Berhad s group banking branch network, and AmLife branches and life insurance agency force / AmFamily Takaful Berhad Uni.Asia Life Assurance Berhad Pramerica BSN Holdings Sdn Bhd Provides a full portfolio of Shariah compliant family takaful products, which are distributed primarily through bank channels Underwriting of life insurance business including investmentlinked business / Average PBR 2.13 Range of PBR 1.42 to 3.05 MAAT 4.49 (Source: Extracted from the announcements made by the respective Comparable Companies to Bursa Securities)

3 Based on the above, the PBR of 4.49 times for the Proposed Disposal is reasonable, given that it is higher than the average PBR of 2.13 times of the Comparable Companies. The PBR of 4.49 times for the Proposed Disposal is also higher than the range of PBR of the Comparable Companies of between 1.42 times and 3.05 times. A higher PBR to a vendor indicates a higher amount of consideration paid above the book value of the company. The Disposal Consideration will be satisfied in the following manner:- RM300 million to be paid upon completion of the sale and purchase of the Sale Shares as specified in the SPA ( Completion ) subject to the Adjustments; and RM93.75 million to be paid on the third anniversary of the Completion Date (as defined in Section of this Announcement) in accordance with Section of this Announcement ( Anniversary Date ). On the assumption that the Proposed Disposal had been completed on 31 December 2015, MAAG and its subsidiaries (collectively, MAAG Group or Group ) expect to record a proforma non-recurring gain on disposal (after deducting the estimated expenses of RM2.5 million to be incurred for the Proposals) of approximately RM289.5 million. 2.3 Salient terms of the SPA The salient terms of the SPA are set out below: Sale of Sale Shares Subject to the terms of the SPA, the Vendors shall sell the full legal and beneficial title to all (and not some of) the Sale Shares to the Purchaser free from all encumbrances and together with all rights attached thereto, including all rights to any dividend or other distribution declared, made or paid on or after the last day of the calendar month if the day that the last of the conditions precedent as set out in Section below have been fulfilled or waived ( Unconditional Date ) is at least five (5) business days prior to the last day of the calendar month or where the Unconditional Date is less than five (5) business days prior to the last day of the calendar month, on the last day of the following calendar month ( Completion Date ) Mode of consideration The total disposal consideration of RM525.0 million, for the sale and purchase of the Sales Shares shall be paid by the Purchaser to each of the Vendors (RM million and RM million to MAAG and Solidarity respectively) subject to the Adjustments and in accordance with the terms and conditions of the SPA, in the following manner:- the initial consideration of RM300.0 million and RM100.0 million to MAAG and Solidarity respectively simultaneous with the fulfilment of the Vendors obligations at Completion subject to the Adjustments ( Initial Consideration ); and the balance consideration of RM93.75 million and RM31.25 million to MAAG and Solidarity respectively on the Anniversary Date ( Retained Consideration ) provided that to the extent that the liability for or the quantum of, any pending claims by the Purchaser under the SPA, including without limitation under the representations and warranties given by the Vendors, the indemnities from the Vendors and/or the third party claim as specified in the SPA have not been settled between the Vendors and the Purchaser or finally determined by a governmental authority of competent jurisdiction or arbitral tribunal as at the Anniversary Date ( Pending Purchaser Claims ), such amounts under the Pending Purchaser Claims shall be further retained until such time that the Pending Purchaser Claims have been settled or finally determined or dealt with in accordance with the terms of the SPA. 3

4 2.3.3 Conditions precedent The Completion is conditional upon the following conditions being fulfilled on or prior to 90 days following the execution of the SPA (or such later date as may be agreed in writing by the Vendors and Purchaser) ( Cut-off Date ):- the approval of the shareholders of MAAG at an extraordinary general meeting ( EGM ) to be held to approve the Proposed Disposal upon the terms of the SPA; the consents from the following counterparties in respect of the transaction contemplated under the SPA:- (i) (ii) (iii) Bank Muamalat Malaysia Berhad pursuant to the distribution agreement dated 16 January 2015 between MAAT and Bank Muamalat Malaysia Berhad; ISM Insurance Services Malaysia Berhad pursuant to the license and support agreement dated 31 December 2012 between MAAT and ISM Insurance Malaysia Services Berhad; Maybank Islamic Berhad ( Maybank ) under the:- (aa) (bb) (cc) (dd) bank guarantee of RM166,500 obtained from Maybank in favour of the Ministry of Home Affairs, Malaysia pursuant to the letter of offer dated 7 November 2014 from Maybank to MAAT; bank guarantee of RM118,170 obtained from Maybank in favour of the Department of National Unity and Integration, Malaysia pursuant to the letter of offer dated 9 January 2015 from Maybank to MAAT; bank guarantee of RM39, obtained from Maybank in favour of Universiti Teknikal Malaysia, Melaka pursuant to the letter of offer dated 1 October 2014 from Maybank to MAAT; and bank guarantee of RM18, obtained from Maybank in favour of Kuantan Municipal Council pursuant to the letter of offer dated 3 March 2015 from Maybank to MAAT; (iv) (v) Sungard Sherwood Systems Group Limited ( Sungard ) pursuant to the Software Licensing and Services Agreement dated 15 June 2010 between Sungard and MAAT and Conversion Order (Dongles to Software User Licences) dated 21 December 2012 between Sungard and MAAT; the counterparties set out in column 1 of Schedule 6 of the SPA pursuant to the retakaful contracts set out in column 2 of Schedule 6 of the SPA; and (vi) Perodua Sales Sdn Bhd pursuant to the letter dated 14 April 2015 from Perodua Sales Sdn Bhd to MAAT and the acknowledgement dated 20 April 2015 from MAAT to Perodua Sales Sdn Bhd; (c) the receipt by the Purchaser of the trademark licence agreement, duly executed by MAAG, in relation to the consent provided by MAAG for MAAT's use of the MAA name or trademarks incorporating the MAA name, which shall be effective from Completion; 4

5 (d) (e) (f) (g) the receipt by the Purchaser of the source code licence agreement, duly executed by MAAG, in relation to the grant by MAAG to MAAT of the perpetual, royalty-free and non-exclusive licence for MAAT to use certain source codes and computer systems that were previously assigned by Zurich Services Malaysia Sdn Bhd to MAAG with effect from Completion; the Vendors notifying the Purchaser in writing that there has been no fact, matter, circumstance or event individually or in the aggregate with any such fact, matter, circumstance or event (whether existing or occurring on or before the date of the SPA or arising or occurring afterwards prior to Completion) which constitutes or could reasonably be expected to constitute a material adverse effect (as defined in Clause 1 of the SPA); the Vendors notifying the Purchaser in writing that the capital adequacy ratio of MAAT calculated in line with the principles issued by BNM ( CAR ) is above 150% as at the month end prior to the date of the SPA and the Completion Date, it being agreed that the CAR as at the month end prior to the date of the SPA shall be determined by an independent third party accounting expert in accordance with Clause 6.3 of the SPA; and MAAT having obtained BNM s approval for the appointment of the candidates nominated by the Purchaser to the board of directors of MAAT, (hereinafter collectively referred to as the Conditions Precedent ). The Purchaser may waive, either in whole or in part, any of the Conditions Precedent at any time by giving notice in writing to the Vendors Completion Subject to the SPA becoming unconditional on the Unconditional Date, Completion shall take place on the Completion Date. None of the Parties is obligated to complete the SPA unless the other Party complies with all of its obligations under the SPA as at Completion, provided that for the purposes of interpreting Parties in this Section 2.3.4, the Vendors shall be collectively regarded as one (1) Party and the Purchaser shall be regarded as one (1) Party Adjustments The Initial Consideration will be adjusted as follows:- (i) (ii) if CAR as of the Completion Date is equal to or above 190%, the Initial Consideration shall only be reduced or increased for the Final Consolidated NAV Adjustment (as defined and described in Section below) as applicable. A reduction shall be paid by the Vendors to the Purchaser and an increase shall be paid by the Purchaser to the Vendors; or if CAR as of the Completion Date is below 190% and the consolidated net asset value of MAAT determined in accordance with MAAT s income statement for the period from 1 January 2015 to the Completion Date and MAAT s consolidated statement of financial position as at the Completion Date ( Final Consolidated NAV ) is below the consolidated net asset value of MAAT as finally determined between the Vendors and the Purchaser as being Ringgit Malaysia One Hundred Sixteen Million Eight Hundred Forty Six Thousand (RM116,846,000), subject to any increase pursuant to the SPA (if applicable) ( Initial Consolidated NAV ), the Initial Consideration shall be reduced either for the Final Consolidated NAV Adjustment in the manner as set out in Section 2.3.5(i) below or 5

6 for the CAR Adjustment (as defined and described in Section (c) below), whichever results in a higher reduction of the Initial Consideration. Such amount shall be paid by the Vendors to the Purchaser; or (iii) if CAR as of the Completion Date is below 190% and the Final Consolidated NAV is above the Initial Consolidated NAV, the Initial Consideration shall only be reduced for the CAR Adjustment. Such amount shall be paid by the Vendors to the Purchaser. The Final Consolidated NAV Adjustment is based on the Final Consolidated NAV whereby if the Final Consolidated NAV is:- (i) (ii) less than the Initial Consolidated NAV, the Initial Consideration shall be reduced (on a RM1.00 for each RM1.00 basis) by an amount equal to that difference, which amount shall be paid by the Vendors to the Purchaser; or more than the Initial Consolidated NAV, the Initial Consideration shall be increased (on a Ringgit Malaysia RM0.997 for each RM1.00 basis) by multiplying the amount equal to that difference by 0.997, which amount shall be paid by the Purchaser to the Vendors. (c) (d) Any capital shortfall arising from MAAT having a CAR below 190% as of Completion Date shall be translated into an amount of capital which would need to be injected into MAAT to bring the CAR back to a CAR of 190% after considering a 1.94% capital charge on the assets of such capital injection ( CAR Adjustment ). The amounts payable shall be paid:- (i) (ii) by the Vendors (based on the proportions of their shareholding in MAAT) to the Purchaser in cash to the Purchaser s bank account no later than fourteen (14) days after the final agreement or determination of the Final Consolidated NAV; or by the Purchaser to the Vendors (based on the proportions of their shareholding in MAAT) in cash to the respective bank accounts of the Vendors, no later than fourteen (14) days after the final agreement or determination of the Final Consolidated NAV Indemnities The Vendors will indemnify the Purchaser and the Company, and their respective directors and officers from and against, and pay to the applicable Purchaser and the Company, and their respective directors and officers:- the amount of any and all losses arising as a result of any of the specified circumstances set out in Clause 9.6 of the SPA including any breach of representations and warranties by the Vendors, any potential impairment of specified retakaful assets of the Company and any capital shortfall arising from the Company having a CAR below 190% for the period from 31 May 2015 until the Completion Date (only to the extent such losses exceed the amount covered under the CAR Adjustment); and/or the amounts that are payable under the tax indemnity set out in Schedule 9 of the SPA. 6

7 2.3.7 Termination In the event that any of the Conditions Precedent shall not have been fulfilled by the Vendors or waived by the Purchaser on or before the Cut-Off Date, the Vendors and the Purchaser shall not be bound to proceed with the sale and purchase of the Sale Shares respectively and the SPA shall terminate and cease to be of any effect save for the surviving clauses specified under the SPA, which shall remain in force and save in respect of claims arising out of any antecedent breach of the SPA. In the event all the Conditions Precedent are fulfilled and any of the warranties given by the Purchaser under the SPA is untrue or misleading or unfulfilled, each of the Vendors shall be entitled to terminate the SPA without liability on the respective Vendors and the SPA shall cease to be of any effect save for the surviving clauses specified under the SPA, which shall remain in force and save in respect of claims arising out of any antecedent breach of the SPA Governing Law The SPA is governed by the laws of Singapore. 2.4 Liabilities to be assumed Save for the obligations and liabilities in and arising from, pursuant to or in relation to the SPA, there are no other liabilities, including contingent liabilities and/or guarantees, to be assumed by Zurich pursuant to the Proposed Disposal. 2.5 Original cost of investment MAAG s original dates and costs of investment in MAAT are as follows:- Dates of investment Cost of investment (RM) 2 May May June ,999,998 Total 75,000, Information on MAAT MAAT was incorporated on 2 May 2006 in Malaysia under the Companies Act, 1965 as a joint venture company between MAAG and Solidarity (a company incorporated under the laws and regulations of the Kingdom of Bahrain) to carry on takaful business in Malaysia. MAAT was registered by BNM as a takaful operator under Section 8 of Takaful Act, 1984 to carry on takaful business in the classes of family solidarity and general business with effect from 1 July As at 29 April 2016, MAAT has 6,363 Family Takaful agents and 10,127 General Takaful agents operating through a network of 9 branches strategically located in major cities and towns in Malaysia. The authorised share capital of MAAT is RM150,000,000 comprising 150,000,000 ordinary shares of RM1.00 each in MAAT of which 100,000,000 ordinary shares of RM1.00 each in MAAT have been issued and are fully paid-up. At present, MAAG and Solidarity hold 75% and 25% equity interest in MAAT, respectively. 7

8 The directors of MAAT are as follows:- (c) (d) (e) (f) Tan Sri Ahmad bin Mohd Don (Chairman) Tan Sri Datuk Seri Razman Md Hashim bin Che Din Md Hashim Assoc. Prof. Dr Md Khalil bin Ruslan Datuk Muhamad Umar Swift Ashraf Adnan Nureddin Bseisu Onn Kien Hoe The key financial information of MAAT for the past three (3) financial years ended 31 December ( FYE ) 2013 to FYE 2015 are set out below:- Audited FYE 2013 FYE 2014 FYE 2015 (RM 000) (RM 000) (RM 000) Revenue 388, , ,302 Profit before taxation ( PBT )/Loss before taxation 13,047 (3,708) 2,813 ( LBT ) Profit after taxation ( PAT )/Loss after taxation 10,003 (4,933) (6,612) ( LAT ) Shareholders equity / NA 122, , ,188 No. of shares ( 000) 100, , ,000 NA per share (RM) Commentaries:- FYE 2013 MAAT s revenue for the FYE 2013 increased by RM99.5 million or 34.4% to RM388.6 million (FYE 2012: RM289.1 million). For the FYE 2013, the Family takaful fund recorded a 28.2% increase in gross earned contributions to RM268.2 million (FYE 2012: RM209.1 million), whilst the General takaful fund recorded a 41.1% increase in gross earned contributions to RM215.8 million (FYE 2012: RM152.9 million). MAAT recorded a lower PBT of RM13.0 million (FYE 2012: RM16.0 million), attributed by a PBT of RM11.4 million (FYE 2012: RM8.8 million) from the Shareholders' fund and a PBT of RM1.6 million (FYE 2012: RM6.8 million) from the General takaful fund. There was no contribution from the Family takaful fund (FYE 2012: PBT of RM0.4 million). The higher PBT recorded by Shareholders' fund for the FYE 2013 was mainly contributed by higher wakalah fee income and a surplus transfer of RM7.3 million (FYE 2012: RM9.4 million) from the Family takaful risk fund. The lower PBT recorded by the General takaful fund during the FYE 2013 was mainly due to higher net takaful benefits and claims, wakalah fee expenses and impairment allowances for takaful receivables. However, there was no contribution from the Family takaful fund for the FYE 2013 (FYE 2012: RM0.4 million) mainly due to higher net takaful benefits and claims, wakalah fee expenses and impairment allowances for takaful receivables. FYE 2014 MAAT s revenue for the FYE 2014 increased by RM99.5 million or 25.6% to RM488.1 million (FYE 2013: RM388.6 million). For the FYE 2014, the Family takaful fund recorded a 37.1% increase in gross earned contributions to RM367.6 million (FYE 2013: RM268.2 million), whilst the General takaful fund recorded a 32.9% increase in gross earned contributions to RM286.8 million (FYE 2013: RM215.8 million). 8

9 MAAT recorded a LBT of RM3.7 million (FYE 2013: PBT of RM13.0 million), attributed by a PBT of RM8.2 million (FYE 2013: PBT of RM11.4 million) from the Shareholders' fund, a LBT of RM0.6 million (FYE 2013: PBT of RM1.6 million) from the General takaful fund and a LBT of RM11.3 million (FYE 2013: Nil) from the Family takaful fund. The lower PBT recorded by Shareholders' fund was mainly due to the increase in management and commission expenses, despite of a higher surplus transfer of RM11.0 million (FYE 2013: RM7.3 million) from the Family takaful risk fund. The LBT recorded by the General takaful fund was mainly due to higher wakalah fee expenses and impairment allowance for takaful receivables, which had outweighed the improvement in net takaful benefits and claim ratio to 51.9% (FYE 2013: 60.7%). The LBT recorded by the Family takaful fund was mainly due to increase in net takaful benefits and claims particularly from the medical and health products which had led to the termination of re-takaful treaty support thereby necessitating higher reserving. (c) FYE Information on Zurich MAAT's revenue for the FYE 2015 decreased by 17.7% to RM416.3 million (FYE 2014: RM488.1 million). For the FYE 2015, the Family takaful fund recorded a 31.8% decrease in gross earned contributions to RM250.7 million (FYE 2014: RM367.6 million), whilst the General takaful fund recorded a 3.2% decrease in gross earned contributions to RM277.6 million (FYE 2014: RM286.8 million). During the FYE 2015, MAAT recorded a PBT of RM2.8 million (FYE 2014: LBT of RM3.7 million), attributed by a PBT of RM7.0 million (FYE 2014: PBT of RM8.2 million) from the Shareholders' fund, a PBT of RM0.6 million (FYE 2014: LBT of RM0.6 million) from the General takaful fund and a LBT of RM4.7 million (FYE 2014: LBT of RM11.3 million) from the Family takaful fund. The higher PBT recorded by Shareholders' fund during the FYE 2015 was mainly due to higher surplus transfer of RM11.3 million (FYE 2014: RM11.0 million) from the Family takaful risk fund and surplus transfer of RM1.5 million (FYE 2014: nil) from the General takaful fund; despite of lower wakalah fee income. The PBT recorded by the General takaful fund during the FYE 2015 was mainly due to higher net earned contribution and write back of impairment allowance for takaful receivables. The lower LBT recorded by the Family takaful fund during the FYE 2015 was mainly resulted by the efforts taken to reprice loss-making medical products. Zurich was incorporated in Zurich, Switzerland. The address of the registered office is Mythenquai 2, 8002 Zurich, Switzerland. Zurich is a wholly-owned subsidiary of Zurich Insurance Group Ltd ( ZIGL ) which is listed on the SIX Swiss Exchange, Switzerland. Zurich and its subsidiaries ( Zurich Group ) is the provider of insurance products and related services. Zurich operates in Europe, North America, Latin America and Asia Pacific through its subsidiaries as well as branch and representative offices. Based on the Zurich Group s audited financial statements for the FYE 2015, the Zurich Group recorded an overall operating profit of United States Dollar ( USD ) 2.9 billion while its net income attributable to shareholders and shareholders equity stood at USD1.9 billion and USD29.6 million respectively. As at 31 December 2015, the Insurance Financial Strength Rating of Zurich are AA- by Standard & Poor s, Aa3 by Moody s and A+ (superior) by A.M. Best. 9

10 3. PROPOSED SPECIAL DIVIDEND The Proposed Special Dividend entails the proposed payment of part of the Disposal Consideration as an interim special dividend of RM0.35 per MAAG Share to the Entitled Shareholders on the Entitlement Date after the completion of the Proposed Disposal. For illustrative purposes only, the Proposed Special Dividend will amount to approximately RM100.8 million computed based on the current issued and paid-up share capital of MAAG comprising 292,692,252 MAAG Shares and after excluding 4,805,200 treasury shares held by the Company as at 29 April The actual and final quantum of the Proposed Special Dividend payable by the Company will depend on the actual number of MAAG Shares in issue and after excluding the treasury shares held by the Company on the Entitlement Date. The Proposed Special Dividend is not subject to the approval of the shareholders of MAAG or any relevant authorities. The Proposed Special Dividend is conditional upon the completion of the Proposed Disposal but not vice versa. 4. UTILISATION OF PROCEEDS The gross proceeds of RM million to be received from the Proposed Disposal, subject to the Adjustments and the terms and conditions of the SPA, are intended to be utilised in the following manner:- Description of utilisation Expected timeframe for utilisation Amount RM 000 Proposed Special Dividend Within 6 month from the Completion Date 100,761 Future investment opportunity(ies) Within 24 months from the Completion Date 196,739 (c) Future investment opportunity(ies)/ working capital Within 24 months from the receipt of the Retained Consideration 93,750 (d) Estimated expenses relating to the Proposals Within 1 month from the Completion Date 2,500 Notes:- Total gross proceeds to be raised 393,750 The final amount payable under the Proposed Special Dividend will be determined on the Entitlement Date. Any difference between the actual and indicative amount of the Proposed Special Dividend will be adjusted against the amount to be utilised for future investment opportunities/working capital. It is the intention of the Board to maintain the listing status of MAAG and to utilise the remaining proceeds of approximately RM196.7 million (after deducting estimated expenses relating to the Proposals of approximately RM2.5 million) to acquire prospective new businesses and/or assets within 24 months from the Completion Date. As at the date of this announcement, the Board has not identified any potential investment opportunities. The Board is still evaluating options for the optimal utilisation of the said proceeds in order to maximise its shareholders value. The Company will make the necessary announcements on any material developments in respect of the above in accordance with the Listing Requirements. If the nature of the transaction requires shareholders approval pursuant to the Listing Requirements, the Board will seek the necessary approval from the shareholders of MAAG at an EGM to be convened. 10

11 Nevertheless, in the event the Group is unable to fully utilise the allocated proceeds or identify any suitable and viable new businesses and/or assets within the stipulated timeframe (or extended timeframe, if applicable), the proceeds allocated for future investment opportunities may be distributed back to the entitled shareholders of MAAG. The mode and details of any distribution shall be determined and announced later by the Board, and if necessary, the Board will seek the necessary approval from the shareholders of MAAG at an EGM to be convened. (c) Under the terms of the SPA, MAAG is expected to receive the balance proceeds of the Disposal Consideration amounting to RM93.75 million on the third anniversary of the Completion Date subject to any Pending Purchaser Claims as described in Section of this Announcement. The final proceeds to be received are intended to be utilised towards future investment opportunities and/or as additional working capital to finance the day-to-day operations. Given that the actual proceeds can only be ascertained at a later date, the Company is unable to provide further breakdown of its proposed utilisation at this juncture. However, the Company will make the necessary announcements on any material developments in respect of the above in accordance with the Listing Requirements. If the nature of the transaction requires shareholders approval pursuant to the Listing Requirements, the Board will seek the necessary approval from the shareholders of MAAG at an EGM to be convened. (d) The proceeds amounting to RM2.5 million are expected to be utilised to defray the professional fees, fees payable to the relevant authorities, expenses to convene EGM, printing, despatch and advertising expenses as well as other miscellaneous expenses relating to the Proposals. Any change in the amount of proceeds to be received from the Proposed Disposal will be adjusted against the working capital. Pending the utilisation of the proceeds to be raised from the Proposed Disposal (including accrued interest, if any) or the balance thereof, the amount is intended to be initially placed as deposits with banks or other licensed financial institutions or short-term money market instruments prior to the eventual utilisation for the above intended purposes. 5. RATIONALE FOR THE PROPOSALS 5.1 Proposed Disposal The Board believes that the Proposed Disposal provides an opportunity for the MAAG Group to unlock and realise the value of its investment at an attractive valuation. The insurance and takaful sector in Malaysia has been increasingly competitive following liberalisation of the Malaysian financial sector. In the insurance and takaful industry, development such as the merger and acquisition transactions over domestic insurance/takaful company, implementation of risk based capital, and tie-up between bank and insurance/takaful companies, have contributed to an increasingly challenging insurance/takaful environment. The Board believes that the Proposed Disposal is timely and is of the view that as a standalone takaful company without banking business nor strategic partnership, the prospects of MAAT will be challenging. Therefore, the Proposed Disposal represents a good opportunity for the Group, to unlock the value of its investment in MAAT, as well as for MAAT going forward. As a result of the Proposed Disposal, the MAAG Group will realise a proforma non-recurring gain on disposal (after deducting the estimated expenses of RM2.5 million for the Proposals) of about RM289.5 million based on the Disposal Consideration and the latest audited financial statements of MAAT as at 31 December

12 5.2 Proposed Special Dividend The Proposed Special Dividend is undertaken to reward the existing shareholders of MAAG for their continuous support for the Company. 6. LISTING STATUS OF MAAG Upon completion of the disposal of the entire equity interest held in Malaysian Assurance Alliance Berhad in September 2011, the Company was classified as a Practice Note 17 ( PN17 ) company pursuant to paragraph 8.04 of the Listing Requirements, whereby a listed issuer has suspended or ceased its major business or operations as a result of the disposal of the listed issuer s major business and the Company is therefore required to comply with paragraph 8.04(3) and PN17 of the Listing Requirements including to submit a regularisation plan to the relevant authorities to regularise its condition and to implement the said plan within the stipulated timeline. Bursa Securities has granted its approvals for extension of time for the Company to submit its regularisation plan, with the last extension being up to 31 December The Company had on 16 December 2015 sought a further extension of time from Bursa Securities to comply with paragraph 8.04(3) and PN17 of the Listing Requirements. Bursa Securities had, vide its letter dated 18 February 2016, approved a further extension of time of up to 30 June 2016 for the Company to submit a regularisation plan to the regulatory authorities. For avoidance of doubt, the Proposed Disposal is not part of the Company s regularisation plan. The Board intends to maintain the listing status of the Company. In this regard, the Company would have to regularise its condition to comply with paragraph 8.04(3) and PN17 of the Listing Requirements as a PN17 company within the stipulated timeframes set out under the Listing Requirements. The Board is still assessing and evaluating plans for the optimal utilisation of the proceeds from the Proposed Disposal and will endeavour to regularise its condition within the stipulated timeframes. In addition, upon completion of the Proposed Disposal, MAAG will not fall within the ambit of a Cash Company pursuant to paragraph 8.03 of the Listing Requirements whereby the cash criterion is where the consolidated assets of MAAG consist of 70% or more of cash or shortterm investments, or a combination of both. Based on the audited consolidated financial statement of MAAG as at 31 December 2015 and on the assumption that the Proposed Disposal has been effected on that date, the cash and short term investments of MAAG is approximately 65.4% of its assets on a consolidated basis. Whereas on the assumption that the Proposals have been effected on that date, the cash and short term investments of MAAG is approximately 59.7% of its assets on a consolidated basis. 7. RISK IN RELATION TO THE PROPOSED DISPOSAL 7.1 Non-completion The Proposed Disposal is subject to completion risk conditional upon the fulfilment and/or waiver (as the case may be) of the Conditions Precedent or occurrence of any of the termination events specified in Section of this Announcement. There is no assurance that the Conditions Precedent will be satisfied and/or waived (as the case may be) or that none of the termination events may occur. The Vendors and the Purchaser are not obligated to complete the SPA unless the other party complies with its obligations under the SPA at Completion. In this respect, the Vendors shall collectively be regarded as one party. Accordingly, there can be no assurance that the Proposed Disposal will be completed. 12

13 Nevertheless, the Company and MAAT (where relevant) will use their best endeavours to obtain the requisite approvals and satisfaction of all the Conditions Precedent in a timely manner and mitigate the occurrence of any of the termination events which are within their control to ensure the completion of the Proposed Disposal. 7.2 Contractual risks MAAG may be subject to certain contractual risks including, but not limited to the representations, warranties, covenants and indemnities which are given or to be given pursuant to the SPA. MAAG may also be subject to contractual risks if the obligations of the respective Vendors under the SPA are not fulfilled and/or in the event of any breach of the terms and conditions set out in the SPA. MAAG shall endeavour to ensure full compliance in relation to the fulfilment of its obligations under the SPA. 7.3 Listing status Upon completion of the disposal of the entire 100% equity interest held by MAAG in Malaysian Assurance Alliance Berhad in September 2011, MAAG has been classified as a PN17 company pursuant to paragraph 8.04 of the Listing Requirements. In such an event, MAAG is required to submit a regularisation plan to the relevant authorities for their approvals. The continuous listing of MAAG on the Main Market of Bursa Securities is dependent on the ability of Board and management to formulate a regularisation plan within the stipulated period. There can be no assurance that the regularisation plans proposed by MAAG will be approved by the relevant authorities and its shareholders, and successfully implemented. Failure to comply with the obligations under paragraph 8.04(3) and PN17 of the Listing Requirements after the completion of the Proposed Disposal may result in the MAAG Shares being suspended from trading on Bursa Securities and/or being delisted from the Official List of Bursa Securities. [The rest of this page is intentionally left blank] 13

14 8. EFFECTS OF THE PROPOSALS The Proposals will not have any effect on the issued and paid-up share capital and substantial shareholders shareholdings of the Company. The expected effects of the Proposals on the NA, gearing, earnings and earnings per MAAG Share of the Company and/or the Group (whichever applicable) are set out below for illustration purpose only. 8.1 NA and gearing Based on the audited consolidated financial statements of MAAG as at 31 December 2015, the proforma effects of the Proposals on the NA per MAAG Share and gearing of the MAAG Group based on the assumption that the Proposals had been effected as at that date are as follows:- Group Level Audited as at 31 December 2015 (I) (1) Adjustments for subsequent events (II) After (I) and the Proposals RM 000 RM 000 RM 000 Share capital 292, , ,693 Treasury shares (444) (4,531) (4,531) Retained earnings 112, ,888 (2)&(3) 293,644 Reserves 5,160 5,160 5,393 Equity attributable to owners of the Company 410, , ,199 Non-controlling interests 27,789 27,789 - Total equity 437, , ,199 No. of MAAG Shares 292, , ,693 NA per MAAG Share (RM) Total borrowings (RM 000) Gearing ratio (times) Notes:- (1) After adjusting for the following events subsequent to 31 December 2015:- Proforma gain of approximately RM0.96 million arising from the conditional Share Sale Agreement dated 8 September 2015 entered into between MAA Corporation Sdn Bhd and Finexus Sdn Bhd (formerly known as eprotea MSC Sdn Bhd) for the proposed disposal of the entire issued and paid-up share capital of MAA Cards Sdn Bhd for a total consideration of RM1.0 million and the amount equivalent to the final net current assets of MAA Cards Sdn Bhd on the completion date, which was completed on 31 March 2016; Payment of the first interim dividend of 3 sen per MAAG Share under the single-tier dividend system in respect of the FYE 2016 totalling approximately RM8.7 million which was paid on 31 March 2016; and 14

15 (c) Subsequent to the FYE 2015 and up to 29 April 2016, the Company purchased a total 4,296,400 MAAG Shares of its issued share capital from the open market at an average price of RM0.95 per MAAG Share. The total purchase consideration paid for the said share buy-back including the transaction costs amounted to RM4.1 million and were financed by MAAG s internally generated funds. The MAAG Shares so purchased are held as treasury shares in accordance with Section 67A of the Companies Act, 1965 and carried at purchase cost. As at 29 April 2016, the total number of treasury shares held by the Company stood at 4,805,200 MAAG Shares. (2) For illustration purpose, based on the audited consolidated financial statements of MAAG as at 31 December 2015 and on the assumption that the Proposed Disposal had been completed on that date, the MAAG Group expects to realise a proforma non-recurring gain on disposal (after deducting the estimated expenses of RM2.5 million to be incurred for the Proposals) of approximately RM289.5 million. (3) Approximately RM100.8 million payable under the Proposed Special Dividend computed based on the total number of MAAG Shares in issue of 292,692,252 MAAG Shares and after excluding 4,805,200 treasury shares held by the Company as at 29 April Earnings and earnings per MAAG Share ( EPS ) The Proposed Disposal will not have any effect on the earnings and EPS of the MAAG Group for the FYE 2015 as the Proposed Disposal is expected to be completed in the third quarter of However, the Proposed Disposal is expected to increase the earnings and EPS of the MAAG Group for the financial year ending 31 December The MAAG Group expects to realise a non-recurring gain on disposal arising from the Proposed Disposal. Nonetheless, MAAT will no longer contribute to the future consolidated earnings of the MAAG Group upon completion of the Proposed Disposal. For illustration purpose only and based on the audited financial statements of the MAAG Group for the FYE 2015, the Proposed Disposal would result in a proforma non-recurring gain on disposal of about RM289.5 million (after deducting the estimated expenses of RM2.5 million to be incurred for the Proposals) representing an EPS of approximately RM0.97 to the MAAG Group. Upon completion of the Proposed Disposal, MAAT s PBT of approximately RM2.8 million for the FYE 2015 will no longer be consolidated as part of the MAAG Group. However, the actual gain on the Proposed Disposal can only be determined once the completion date is determined, which is expected to be in the third quarter of The Proposed Special Dividend will not have any effect on the earnings of the MAAG Group. 9. APPROVALS REQUIRED AND INTER-CONDITIONALITY The Proposed Disposal is subject to and conditional upon approvals being obtained from the following:- (c) the Ministry of Finance Malaysia, which was obtained via the letter from BNM dated 27 April 2016; the shareholders of MAAG at an EGM to be convened; and any other relevant party and/or authority, if required. 15

16 The Proposed Special Dividend is not subject to the approval of the shareholders of MAAG or any relevant authorities. The Proposals are not conditional upon any other corporate exercise undertaken or to be undertaken by the MAAG Group. The Proposed Special Dividend is conditional upon the completion of the Proposed Disposal but not vice versa. 10. ESTIMATED TIME FRAME FOR SUBMISSION TO RELEVANT AUTHORITIES AND COMPLETION The draft circular to the shareholders of MAAG in relation to the Proposals is expected to be submitted to Bursa Securities within two (2) months from the date of this announcement. Barring any unforeseen circumstances and subject to all requisite approvals being obtained, the Board expects the Proposals to be completed by the third quarter of INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED None of the Directors and/or major shareholders of MAAG and/or persons connected to them as defined in the Listing Requirements, has any interest, direct or indirect, in the Proposals, save for their respective entitlements as shareholders of the Company under the Proposed Special Dividend, the rights of which are also available to all other existing shareholders of MAAG. 12. DIRECTORS STATEMENT The Board, having considered all aspects of the Proposals and the preliminary advice/view of TA Securities, being the Independent Adviser for the Proposed Disposal, is of the opinion that the Proposals are in the best interest of the MAAG Group and are not detrimental to the shareholders of MAAG. The Board is also satisfied that Zurich Group has adequate financial resources to fully settle the Disposal Consideration in cash, taking into consideration Zurich Group s cash and cash equivalents position of approximately USD7.8 billion and its shareholders equity of USD29.6 billion based on the audited consolidated financial statements of Zurich Group for the FYE The Board does not intend to seek other alternative offers for its 75,000,000 ordinary shares of RM1.00 each in MAAT held by the Company. 13. ADVISERS KAF IB has been appointed as the Principal Adviser to the Company for the Proposals. As the Proposed Disposal represents a major disposal pursuant to paragraph 10.11A of the Listing Requirements, MAAG has appointed TA Securities on 14 December 2015 as the Independent Adviser in relation to the Proposed Disposal for the following:- (c) to comment as to whether the Proposed Disposal is fair and reasonable in so far as the shareholders of MAAG are concerned, including the reasons for the key assumptions made and the factors taken into consideration in forming such opinion; to advise the shareholders of MAAG on whether they should vote in favour of the Proposed Disposal; and to take all reasonable steps to satisfy itself that it has a reasonable basis to make the comments and advice in subparagraphs and above. 16

17 14. HIGHEST PERCENTAGE RATIO The highest percentage ratio applicable to the Proposed Disposal pursuant to paragraph 10.02(g) of the Listing Requirements is 96.02%. 15. DOCUMENTS FOR INSPECTION The SPA is available for inspection at the registered office of the Company at Suite 12.03, 12th Floor, No. 566, Jalan Ipoh, Kuala Lumpur during normal business hours from Mondays to Fridays (except for public holidays) for a period of three (3) months from the date of this announcement. This announcement is dated 4 May