Sunday, April 19, 2009

Global takaful market could touch RM29b in 2012: E&Y

Ernst and Young's World Takaful Report 2009 notes that global Takaful contributions have risen to US$3.4 billion (RM12.77 billion) in 2007 as compared to US$2.5 billion in 2006.
Saudi Arabia, with contributions totalling to US$1.7 billion in 2007, and Malaysia, with US$797 million, are the top two Takaful markets worldwide.
The report was unveiled at the two-day Annual World Takaful Conference 2009 held in Dubai which ended on April 15.
Held in strategic partnership with the Dubai International Financial Centre (DIFC), some 300 takaful executives globally took part to discuss the opportunities and challenges that a changing economic landscape presents.
"The global downturn has affected everyone and takaful is not immune, said Ernst & Young (Middle East) managing partner for advisory services Omar Bitar.
He said takaful operators now need to better manage their costs in a more challenging market as the risk landscape has changed substantially.
"Investment portfolios, human resource expertise and competition will be their most pressing business risks over the coming 12 months. Operators will also need to reassess their core business, move away from a reliance on high-risk investment returns, and focus on achieving underwriting profit," he said.
The Gulf Cooperation Council (GCC), Malaysia and Sudan are the top three markets for takaful while the Indian subcontinent, Indonesia, Egypt and Turkey, remain the least penetrated Muslim markets, reported Ameinfo.Com.
Compared to the reported losses of almost US$350 billion of conventional insurers and government supported enterprises in the Americas, Europe and Asia, the takaful market has largely shown resilience in the current economic downturn.
However, the report noted that the last quarter of 2008 has seen a decline in the returns-on-equity of major takaful operators. As a consequence, takaful operators are increasingly concerned with the strategic, operational, compliance and financial risks they face today.
The E&Y report recommends that to counter highrisk investment portfolios, takaful operators need to enhance their portfolio management capabilities and improve risk-adjusted returns. This risk for the operators is an opportunity for asset managers, who need to address the unique risk-return profile of takaful operators, it added.
To deal with human resource expertise risk, it has advised operators to focus on developing local talent and partnering for quick market entry. (The Malaysian Reserve, Apr 20, 2009, p31)

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