TMR: Takaful Ikhlas targets 10% rise in policy holders

By P Vijian

Takaful Ikhlas Sdn Bhd expects its certificate holders’ base to expand by nearly 10% this financial year, from 1.8 million to two million.

Its president/CEO Abdul Latiff Abu Bakar (left in photo above) said the company’s products, both general and family takaful schemes, are well received by Malaysians, prompting the company to target good growth this year in terms of revenue and policy holders.

“We will be able to touch the two million mark this financial year and we are also expecting a very good financial result. We will surpass last year’s numbers in terms of gross revenue,” Abdul Latiff told the media in Kuala Lumpur last Friday.

The company recorded RM747 million in revenue in 2013.

Currently, Takaful Ikhlas which is the Islamic insurance unit of MRRB Holdings Bhd, has seen its market share touched 12% based on gross contribution and ranked third among the 12 companies in Malaysia. It is behind market leaders Etiqa Takaful Bhd and Prudential BSN Takaful Bhd.

Last year Takaful Ikhlas launched three new products — Ikhlas Capital Investment- Linked Takaful Plus, Ikhlas Premier Investment-Linked Takaful Plus and Ikhlas “ChoicePlus” Individual Medical Rider. The company offers 83 products in Malaysia.

For the fourth consecutive year, Takaful Ikhlas was awarded “The Best Takaful House” by Euromoney, a monthly business and finance magazine. The award ceremony was held in London in February.

Regional head for Asia Marcus H Langston said Malaysia’s Takaful Ikhlas is setting growth pace in Islamic finance industry.

“They are pushing new innovations and cross-border tie ups. There is a large growth potential….There is no close competition against Malaysia in the Asia region, particularly in terms of innovation,” Langston said after he presented the award to Latiff at the company’s headquarters.

[THE MALAYSIAN RESERVE, 11 March 2014]

BERNAMA: AIA AFG Takaful Integrates With AIA Public Takaful Under Single Licence, Brand Integration

KUALA LUMPUR, March 1 (Bernama) -- Life insurer, AIA, has integrated its Takaful companies, AIA AFG Takaful Bhd and AIA Public Takaful Bhd under a single licence and brand.

The new entity, to be known as AIA Public Takaful Bhd, is jointly owned by AIA Co. Ltd, Public Bank Bhd and Public Islamic Bank Bhd, AIA said in a statement today.

AIA Public Chief Executive Officer Wan Azman Wan Mamat said the company is strengthening its multi-distribution channels through innovative recruitment activities and business collaboration with reputable partners.

"With our added strength and capabilities following the integration, we will deepen our commitment to deliver a more personal, relationship-based experience to our customers and partners," he said.

The new entity will have the advantage to leverage on AIA and Public Bank's leadership positions and established infrastructure in the insurance and banking industry locally to drive growth in the family Takaful space.

The company is also on track to launch 11 new products this year, he said. -- BERNAMA

AIA PUBLIC TAKAFUL STATEMENT HERE.

REUTERS: Brunei to introduce new takaful guidelines by June

Brunei will introduce new guidelines for its Islamic insurance (takaful) sector by June, in order to standardise the way agents are managed by firms. The guidelines will regulate commission rates payable to agents and the qualifications required for them to sell takaful products, Osman Jair, chairman of industry body Brunei Insurance & Takaful Association (BITA), said in an interview with Reuters (19 Feb 2014).

"We will sign an inter-company agreement so companies will be better disciplined," the newswire quoted him.

Brunei, which has southeast Asia's highest per capita income after Singapore, is the latest country to reform its takaful sector in the hope of stimulating growth. Malaysia announced new rules in July 2013 requiring the separation of life and general business lines, while Indonesia will mandate takaful firms to be spun off into independent entities this year, the report added.

Brunei was in the news late alst year when its Sultan, an absolute monarch, decided that the small nation on the Kalimantan island will go the Shariah way, with the promulgation of the Shariah Penal Code 2013. It again made news in Malaysia when a former chief justice alluded that Malaysia could follow suit. Read here.

THE REPORT GOES ON:

BITA was launched in November last year and it is the first to bring all four of Brunei's takaful firms under one roof. "We would like to standardise the industry, this is the main thing," said Jair. The impending guidelines are being reviewed by industry consultants and Autoriti Monetari Brunei Darussalam (AMBD), the country's central bank.

"We want the treatment of agents to be done right. This is so agents can generate serious income, and not take it as part-time work," said a source with AMBD, who did not want to be named as he was not authorised to comment.

The last meeting on the guidelines took place on Feb. 6 and reviewed the different jurisdictions involved in implementation, he added.

With a national population of under half a million people, Brunei's insurance sector is considerably smaller than those of neighbouring Indonesia and Malaysia. Takaful firms own 33 percent of total insurance assets.

TMR: Takaful Malaysia ‘cashback’ payout sees 7.5% rise in 2013

Syarikat Takaful Malaysia Bhd (Takaful Malaysia) made a cash back payout of up to RM30 million last year to its general takaful customers, mainly to those who made no claims during their coverage period.

The payout represents an increase of 7.5% compared to the previous financial year. The company continues to offer customers 15% cash back across its general products which includes motor insurance, to ease the financial burden of escalating insurance premiums.

“This is our most unique proposition that clearly distinguishes us from any other competitor in the local industry, be it the takaful operators or the conventional insurance providers.

"Over the last five years, we have paid out RM137 million as cash back to our valued customers and business partners,” said Takaful Malaysia’s group MD Datuk Mohamed Hassan Kamil.

“These record-breaking payouts over the years are definitely a result of our strong underwriting performance in our general takaful portfolio,” Mohamed Hassan said.

He added that for 30 years, Takaful Malaysia has been the first and only takaful operator in the country to consistently reward its customers with cash back for its general takaful products.

The company’s ongoing objective is to continuously create awareness of the cashback payouts and its wide range of product offerings, in order to ensure the company’s brand presence is enhanced.

Takaful Malaysia also urges the public to be aware of the fact that the 15% cashback differs from the no claim bonus or discount (NCB/ NCD) benefit which is actually a discount earned by the motor insuring public offered by all insurance and takaful operators in the industry.

The 15% cashback is a privilege offered only to its valued customers, by Takaful Malaysia.

Takaful Malaysia says it will continue to emphasise on its operational agility, cost competitiveness and stakeholder confidence next year.

[THE MALAYSIAN RESERVE, 19 Feb 2014]

PruBSN commits RM600k for zakat, charity

PruBSN CEO Azim Mithani (second from left) and PruBSN head, for brand & communications (left) with a student-recipient of the company’s zakat/charity funds. Looking on are the girls dad and officials from the school and the local education authoritiers. – PruBSN pix

Prudential BSN Takaful Bhd (PruBSN) has committed over RM600,000 through its zakat and charity endowment funds, the company said in a statement (18 Feb 2014).

Some RM400,000 is to sponsor 285 students from the the International Islamic University Malaysia (IIUM) and five selected primary schoolchildren from schools in Kuala Kangsar, Perak.

PruBSN, whose management teams is lead by CEO Azim Mithani, is a joint venture between Bank Simpanan Nasional (BSN) and Prudential plc (Prudential) which hold 51% and 49% stakes, respectively.

BLOOMBERG: AIG Lured to Malaysia by Growing Takaful Market

American International Group Inc. is plotting its entry into Malaysia’s Islamic insurance market, lured by the country’s economic expansion and an industry that has grown more than fivefold in less than a decade, reports Bloomberg (18 Feb 2014).

The insurer, the world’s largest before being bailed out by the U.S. government in 2008, will start a Shariah-compliant reinsurance business by June and may eventually offer a fuller range of services, Antony Lee, chief executive officer at AIG’s Malaysian unit, told the newswire in a Feb. 11 interview in Kuala Lumpur. Rising affluence in the Southeast Asian nation will spur increased demand, he said.

Malaysia accounted for 11 percent of the $20 billion of Islamic insurance, or takaful, contributions in 2013, a Feb. 13 report from the Malaysia International Islamic Financial Center shows. New business will increasingly come from outside the Middle East, said Hatim El-Tahir, director of the Islamic finance group at Deloitte & Touche in Bahrain. New York-based AIG follows Munich Re and Swiss Re AG into the retakaful market in Malaysia, whose economy has had only three quarters of economic growth below 5 percent in the last four years.

“In line with the continuing expansion of the takaful business, the demand for retakaful is expected to expand between 15 percent and 20 percent on an annual basis,” Bahrain-based El-Tahir said in a Feb. 15 e-mail interview. “The geographical concentration in terms of global contribution is expected to shift from the Gulf Cooperation Council countries to the Asia- Pacific region by 2015.”

AIG’s Malaysian unit, which was set up in 1953 and has 14 offices, currently offers non-Islamic coverage for property, electronic equipment, medical and personal accidents, according to its website. The company’s venture into retakaful will help it assess the potential of the Shariah-compliant insurance market, according to Lee.

“There’s a whole segment of the market, which is the rural areas, that really is where there’s a much lower penetration rate,” he said. “As you get rural people moving into the cities, the affluence starts coming into it.”

READ FULL REPORT HERE.

RUSHDI: Knowing the numbers game in Islamic Finance

‘A good decision is based on knowledge and not on numbers.’ — Plato.

A day does not go by in the global media without an article on Islamic finance, but it’s mainly rear view coverage and/or analysis.

Yes, we know about the prohibitions, as stories are generally about the “don’ts,” no interest, pork, alcohol, gambling, etc. Surely, the spirit of Islamic finance is about the “positives” of sustainability, governance, stewardships, financial inclusion, etc.

Yes, we know about the connection to ethical finance, meaning financing, investing, and insuring in the non-sin economic sectors. But, is ethical finance talking about Islamic finance? Yes, we know Islamic finance is about connecting the real economy to finance economy, hence, excesses, derivatives and speculation are prohibited. But, if Islamic finance is both commodity Murabahah centric and real estate biased, then where is the innovation that finances the other nine economic sectors?

Yes, we know the size, US$1.3 trillion (RM4.3 trillion), and growth rates, 15%-20% per annum, but is it profitable growth? What happens to Islamic finance when the price of oil goes to less than US$50 per oil barrel? When will it de-link from oil?

Yes, we know about sukuk, from size, issuance, growth, league tables, etc. If sukuk has become the alter ego of Islamic finance, when will we see Mushrakah and Mudarabahah Sukuk spark development of the Islamic equity capital market?

Islamic Finance 1.0

It took Islamic finance 40 years to reach 1.0, that is, US$1 trillion in size, or less than the 1% of global banking assets. During the launch phase, the KPI (key performance indicator) was general awareness about the collateral based finance niché market, ie, rules of engagement.

It was a Muslim country phenomenon, led by the UAE (Dubai), Malaysia, Bahrain, etc, and “international” transactions took place in London and money was managed in a compliant manner by the private Swiss banks for high net worth individuals.

The key takeaway question during this time period: Was the enabling foundation and infrastructure for growth, innovation, development, and cross border expansion established?

Islamic finance 2.0

Depending on how one views the numbers games, Islamic finance has not breached the US$2 trillion mark, but is expected to reach the milestone before 2016. But, if it’s still Murabahah centric with real estate biased, and continues to focus on the Islamic debt capital market (DCM) with nominal compliant SME, VC, and micro-financing, then we are quick-sand stuck in stage 1.0.

The best way to describe 2.0 is to mention sampling of its attributes, as that will get us to US$2 trillion, satisfying those who are numbers obsessed. It should be remembered that a milestone is just a sign post on the road to development and the positioning of Islamic finance as an efficient alternative to conventional finance.

Some of the signs for 2.0 include:

(1) Wakala based Islamic inter-bank benchmark rates;

(2) short term sukuk (programmes) to address asset/liability mismatch and liquidity;

(3) expansion of project based sukuk to build out infrastructure in Organisation Islamic Cooperation (OIC) and municipality needs indebted western countries;

(4) Islamic bank and Takaful consolidation to achieve critical mass, and robust Retakaful to address “leakage”; and

(5) establishment of OIC (subset is Islamic) asset management hub which implies expansion of Islamic asset classes to include, say, compliant trade finance funds (implies increased trade).

Notice, I have deliberately omitted the usual suspects of standardisation, arbitration, cross currency swaps, bankruptcy/lender of last resort, Shariah scholars, qualified human capital, etc., as we need to “do rather than rehash talk of the known knowns”.

Islamic Finance 3.0
It should no longer be a numbers game, at, say US$3 trillion, as it will still be less than 5% of conventional banking. Islamic finance 3.0 should be about:

(1) Branded as Participation Finance, where focus is on business and over religion and does not represent a “threat” or favouritism towards one religion by a country.

(2) A dedicated sovereign wealth fund that builds out Islamic asset classes and acts as feeder to pension funds in Muslim (and non-Muslim) countries.

(3) An authentic (electronic) Islamic stock exchange of only Shariah based (OIC/Non-OIC) companies (Islamic banks, Takaful operators, leasing companies, iREITs), Islamic closed end funds, exchange-traded funds, listed tradeable Sukuk, etc. Starts process (a) financing a knowledge based economy and (b) reducing DCM bias!

(4) Harvard-like business school for Islamic finance and the US$2.6 trillion halal industry, as today’s kaleidoscope of Islamic finance certificates, courses, diplomas, training, etc, scattered in many countries produces varying qualities of graduates! Furthermore, Islamic finance industry seems to cherry experienced conventional bankers to train them in Islamic finance over few weeks/months, and the graduates cannot compete!

(5) Convergence by financing Muslim consumerism of the US$2.6 trillion halal industry’s six silos, food/beverage, clothing/fashion, media/ entertainment, pharmaceutical, cosmetics, and tourism/travel.

Conclusion

“Anyone who thinks there’s safety in numbers hasn’t looked at the stock market pages.” — Irene Peter.

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Rushdi Siddiqui, a former global director at Dow Jones Indexes and global head at Thomson Reuters in Islamic finance, is now president/ED of a (halal) US-based agro-food company. This article first appeared in The Malaysian Reserve, 17 Feb 2014

DNA: Takaful Malaysia says yes to inhousing, no to outsourcing

AFTER outsourcing its information technology (IT) infrastructure for about five years, Syarikat Takaful Malaysia Bhd, the oldest takaful or Islamic insurance operator in the country, has decided to bring it back inhouse, reports Digital News Asia (DNA).

The company, which is 61% owned by BIMB Holdings Bhd, announced that it has adopted Microsoft System Center 2012 to manage its IT infrastructure and end-user computing.

It said that the decision to go inhouse has shown immediate benefits, and it has been experiencing a 40% improvement in response time and 27% in cost reduction.

“In our business, IT is what differentiates us from our competitors. We are on a constant lookout to improve our IT infrastructure to better support our employees in their job,” chief information officer Patrick Wong said at a media briefing in Kuala Lumpur on Feb 11.

While the general assumption is that outsourcing a company’s non-core functions would produce better cost savings, this was not the case for Takaful Malaysia, he said.

Read full report here.

MAA Takaful inks collaborative agreement with LIMRA, CERT

By John Gilbert
MAA Takaful Bhd inked a collaborat ive agreement with Life Insurance and Market Research Association International (LIMRA) and Centre for Research and Training (CERT) yesterday as part of its strategies to further enhance its agency force and to reach a broader takaful market segment.
This is the first time LIMRA is undertaking a broadbased professional distribution development project with a takaful operator. Under the collaborative agreement, LIMRA and CERT will develop and implement a comprehensive Shariah-compliant leadership development programme encompas sing agency leadership training, certification and international recognition in addition to strengthening MAA Takaful's distribution network.
"We have about 6,000 active agents and we hope that within the next five years, half of the current active agents can be accredited as LIMRA Certified Managers of Financial Advisors," MAA Takaful chief executive officer, Salim Majid Zain, told reporters yesterday after the signing ceremony in Kuala Lumpur.

He said the programme will contribute towards value proposition and will further develop the takaful industry in the country.
"Our priority is to ensure that our takaful participants in every corner of the country receive professional advice through a well-suited system that focuses on their needs.
"We are confident this programme will deliver high and professional standard for takaful practitioners in the country," he said.

On MAA Takaful's revenue, Salim said the company is expecting RM1 billion in total revenue in five years through the strong presence of its distribution channels.
He said the contributions will come from life and general insurance segments, which stand at 60% and 40% respectively.
"We expect to receive RM750 million from life insurance in five years time and with the strengthening of our agency force, this will also contribute to our future growth," he said.
Up to June this year, MAA Takaful had already earned RM160 million in revenue and is expected to earn RM250 million by year-end.

(This story appeared in The Malaysian Reserve on 21 September 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

M'sian takaful firms ‘outperforming’ Middle East ones

by Habhajan Singh

Malaysian takaful operators have fared better than their Middle East counterparts in terms of returns on equity since 2007 when world economies underwent the global financial crisis stress.

Malaysian takaful companies also came out better than their Gulf Cooperation Council (GCC) counterparts in terms of risk retention, an indication that Malaysia has a more sophisticated operational capability, according to a global study on takaful by Ernst & Young (E&Y).

The study, in E&Y's third annual edition of its World Takaful Report, showed that Malaysian takaful operators also came out better on technical fronts like claims ratio and underwriting income.

On retention, Bank Negara Malaysia's (BNM) Financial Stability and Payment Systems Report 2009 released in March, had noted that the 'consistently high' net retention level of 72.3% for Malaysian general and general takaful business enabled counterparty reinsurance risks to be kept at 'manageable level'.

It added that as a majority of the offshore and foreign reinsurers were reputable and strongly rated companies, it further reduced the extent of counterparty risk during the challenging financial climate in 2009.

Looking at claims ration, the E&Y report said that claims ratio for takaful operators in the GCC - which includes Bahrain, Saudi Arabia, United Arab Emirates (UAE) and Qatar — 'remain significantly higher' than Malaysian takaful operators 'where underwriting practice appears more structured'.

The report also said that underwriting income has consistently contributed to the profitability of the Malaysian operators while the GCC operators traditionally relied on investments.

Among the GCC takaful operators that contributed data to the study's sampling were Bahrain's Takaful International Company and Solidarity Group Holding; Saudi Arabia's Allied Cooperative Insurance Group, Al Ahlia Cooperative Insurance Company and Alahli Takaful Company; UAE's Abu Dhabi National Takaful Company, Dubai Islamic Insurance and Reinsurance Company, Dar Al Takaful; Qatar's Qatar Islamic Insurance Company; and Kuwait's First Takaful Insurance Company, Wethaq Takaful Insurance Company and Gulf Company for Takaful Insurance Malaysia.

Malaysian players involved were CIMB Aviva Takaful Bhd, Hong Leong Tokio Marine Takaful Bhd, Prudential BSN Takaful Bhd, Takaful Ikhlas Sdn Bhd, AIA Takaful International Bhd and Syarikat Takaful Malaysia Bhd. On ROE, the report study showed that both Malaysian and GCC operators were closest in 2007, with GCC operators averaging at 6.2% while Malaysian operators averaged at 5.7%. Before that, GCC players were constantly scoring higher on the ROE score.

However, post-2007 debt debacle and the financial crisis, the Malaysian operators performed better, with an average return of 11.1% in 2008 and 7.6% in 2009, while GCC players were in the negative zone (-5.3% in 2008 and -6.5% in 2009).

When it comes to operating efficiency, the study found that Malaysia has been consistently stronger in its combined ratios to the GCC, 'although the gap is shrinking'. in 2005, Malaysian operators surveyed had averaged at 41.3% to GCC's 130/8%. In 2009, it was Malaysia at 53.3% and GCC at 71.9%.

"Profitability is under unprecedented stress. In the aftermath of the financial crises, takaful operators are coping with depressed capital levels, distressed asset values and difficult capital markets," E&Y said in a statement when the report was released.

(This story appeared in The Malaysian Reserve on 26 April 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

Takaful Ikhlas eyes rental, property investments

By Alfean Hardy Takaful Ikhlas Sdn Bhd, which has invested RM97 million on two tower blocks in Bangsar South, Kuala Lumpur, is targeting similar investments going forward given the long-term sustainability of rental income for revenue generation, its president and chief executive officer Datuk Syed Moheeb Syed Kamarulzaman said.
The Islamic insurance firm used RM87 million of its policy holders’ funds to buy the commercial property and another RM10 million was invested in renovating both towers. The company has more than a million individual and group policy holders to date.

The unit of main boardlisted MNRB Holdings Bhd moved into all of Ikhlas Point Tower 11A and three floors of Ikhlas Point Tower 11 on Feb 1, 2010. Covering a built-up area of 99,286 sq ft in total, some 32,000 plus sq ft in one of the towers have been earmarked for rental/future expansion.
Speaking at a media briefing in Kuala Lumpur last Thursday, Syed Moheeb said, essentially, the buildings were not Takaful Ikhlas’s.
"These buildings were paid by policy holders’ funds coming from our risk fund. So, inevitably, the policy holders are the owners of the buildings, we’re merely renting it from them.
"We chose this strategy because we wanted to ensure rental income to policy holders and, over the last few years, one of the better revenue generating strategies is rental income, which is more sustainable over the long-term," he said.

Going forward, he said Takaful Ikhlas would make use of either shareholders’ funds or policy holders’ funds to purchase buildings and then rent them out to generate rental income.
"By doing this, we will slowly acquire property. Eventually, we also want to house all our branches in our own buildings. We’re not sure yet whether we will use funds from our shareholders or from our policy holders (when we buy these buildings)," he said, adding that Takaful Point was the firm’s first property investment.
Syed Moheeb said Takaful Ikhlas could have ventured into property investment earlier, but he felt that the firm needed to ensure that, whatever it bought, would have made an impact to investment income.
"The fact that (the two towers) have a capital appreciation of more than 20% indicates that this was a good decision.
"Among some of the things that we’re looking at will be rentable office premises and it won’t be anything else at this point in time. Our investment policy has been very cautious and has been more towards capital preservation and, in any thing that we do, we have to make sure that we don’t have to answer to any bad decisions later on," he said.
Syed Moheeb said Takaful Ikhlas was currently looking at housing two new branches in Klang, Selangor, and Kuala Terengganu, Terengganu, by middle of the year in new properties.
"At this point in time we haven’t identified yet any properties yet (for these two new branches). If you look at the 10 branches that we have currently, these are the areas that we would be looking to make investment opportunities," he said.
The Islamic insurer currently has branches in Kota Baru, Johor Baru, Sungai Petani, Ipoh, Kuching and Kota Kinabalu in Kelantan, Johor, Kedah, Perak, Sarawak and Sabah respectively. Asked on how much would be set aside for Takaful Ikhlas’s property buy war chest going forward, Syed Moheeb said the company’s investment strategy was set by the board, which decides how much went into equities, governmentbacked securities and others.
"Where property is concerned, we’re looking at not more than 20%. In the shorter term at least, until our financial year ending Mar 31, 2011, we will cap this at 20%," he said.

(This story appeared in The Malaysian Reserve on 1 March 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

Takaful Malaysia to restructure Indonesian ops

By Alfean Hardy
Syarikat Takaful Malaysia Bhd (Takaful Malaysia), which has a general and family takaful presence in Indonesia, is looking to revamp its operations there into a leaner, fitter entity that could best be used to penetrate further into the takaful market in that country, its group managing director Datuk Mohamed Hassan Kamil said.
As of its financial year ended June 30, 2009 (FY09), the Islamic insurance firm holds a 56% stake in holding company PT Syarikat Takaful Indonesia, which in turn holds a 57.42% stake in PT Asuransi Takaful Keluarga and a 52.67% stake in PT Asuransi Umum that between them have more than 30 branches in Indonesia.
The company recently injected RM21 million directly into Ansuransi Takaful Keluarga, which meant it also has a stake in the life insurance operations of Syarikat Takaful Indonesia.
The Indonesian operations contributed about RM6.76 million in FY09.

Speaking to reporters after Takaful Malaysia's AGM in Kuala Lumpur yesterday, Mohamed Hassan said, "We're looking to restructure the holding company in Indonesia. We're in the midst of discussing with our other shareholders as to how we can make the structure leaner without having a holding company structure.
"We will still maintain a majority holding in the operating company because these are the money-generating companies," he added.
Mohamed Hassan said that, with the new strucuture in place, there would be some interest by other parties and Takaful Malaysia was looking to partner with local Indonesian banks that would be interested to take up equities in our takaful companies.
"We are looking and will be talking to local banks there," he said. "If I have a bank as a partner, I can leverage on their branches and distribute my products. That would be the most efficient way to reach out to all parts of Indonesia because setting up branches all across Indonesia can be quite costly due to the geographic spread of that country," he said.

The potential in Indonesia, Mohamed Hassan said, was something that Takaful Malaysia could not ignore.
"We believe that the current leader of the country will be able to grow the country rapidlly and economically forward. As a result, we feel that it's a country that we can't afford to ignore in terms of its potential for business," he added.
Mohamed Hassan said the other shareholders in the Indonesia operations had first right of refusal to take up any new shares or capital that it needed to raise there.
"We have about 12 different entities or individuals who hold shares and they will have preference, depending on their current shareholding amount," he said.
He said negotiations with the various shareholders was expected to begin by yearend and that Takaful Malaysia targeted to complete the exercise over the next 12 months.

(This story appeared in The Malaysian Reserve on Nov 13, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

Takaful Malaysia eyes initial Middle East foray

by Alfean Hardy
Syarikat Takaful Malaysia Bhd (Takaful Malaysia), which already has a presence in Indonesia, has been invited to provide technical support to a financial institution in the Middle East and is considering the move as a stepping stone into the West Asia region, its group managing director Datuk Mohamed Hassan Kamil said.
The company, which has recently undergone a RM15 million rebranding exercise as part of its 25th Anniversary, currently has about 34 branches in Indonesia and about 56 branches locally. Speaking to reporters after the ceremony to unveil its new brand in Kuala Lumpur yesterday, Mohamed Hassan said that Takaful Malaysia had been looking at the Middle East markets.
"We have been invited by a party in the Middle East, in Qatar, for us to provide technical support in terms of wanting to set up a takaful business," he said. "The Qatar player wants to start a takaful business, so where do they go and learn about takaful? We're the first and the oldest with the depth of knowledge and expertise that we have is much deeper than most other takaful operators," he added.
To a question on whether such partnerships and technical assistance was a way for Takaful Malaysia to make in-roads into the Middle East market, Mohamed Hassan said,
"Like the example I mentioned earlier, we were invited and we will of course bring along our Takaful Malaysia brand to the partner." "Will we make in-roads within the next six months or so? Hopefully within the next one year, I'd say," he added.
Asked if the Middle East market was the one where Takaful Malaysia would be venturing into, Mohamed Hassan said that the company would consider its choices, given market conditions in the various countries there.
"If you look at the market in the Middle East, like Dubai, for instance, it's quite saturated. There're a lot of companies there already," he said. "The growing areas are in Qatar or Abu Dhabi and those are places that we might be looking into, provided we have some partners on the ground who are willing to explore and expand in the business.
Are we looking for partners? Actually, they're looking for us," he added. Asked where else Takaful Malaysia was looking to make in-roads into, Mohamed Hassan said that, in terms of market potential, the most likely venue that it would look at was China and the Far East.
"We're waiting for the Islamic infrastructure to be put in place," he said.
"As you know, Islamic bonds or sukuks are gaining momentum and not just in the Middle East or in Islamic countries. I believe countries like China and Korea have also explored and even successfully raised some money using the Islamic bond concept. "So, with these financial instruments widely available in those countries, we feel that we will be able to leverage on the portfolio because, when you do business in China, for example, you need to invest the money into Shariah-compliant assets. So, we hope that there wi l l be mor e sukuk s launched or raised in those countries," he added.

(This story appeared in The Malaysian Reserve on Nov 11, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

Swiss Reinsurance gets retakaful licence in KL

By Jason Ng
SWISS Reinsurance Company Ltd received a composite licence to write retakaful business and has opened a so-called dedicated operation in Kuala Lumpur.
The licence, granted by Bank Negara Malaysia, will allow Swiss Re to offer both family and general retakaful solutions to clients worldwide, according to the company's website yesterday.
"This new licence will allow us to consolidate and enlarge the scope of our efforts by also providing general retakaful insurance," Swiss Re said in the statement, adding that the retakaful operation would be headed by Marcel Omar Papp.
The global takaful market could reach US$7 billion (RM23.75 billion) by 2015, Swiss Re said of the future prospects of the business and in 2007, some US$1.7 billion worth of takaful premium were written.
Takaful is an insurance concept based on Islamic principles, providing mutual cooperation, between groups of participants. While the Quran does not object to the concept of insurance, the conventional model of insurance involves the element of gharar (uncertainty), maisir (gambling) and riba (interest), all of which are forbidden in Islam.

(The Malaysian Reserve, Oct 9, 2009, Page 1)

Exim Bank to introduce takaful products next yr

Export-Import Bank of Malaysia Bhd (Exim Bank) is poised to expand its reach further by offering better options to customers via the introduction of Shariah-compliant products.
Islamic financing has been identified as a new area of growth for the bank in view that Malaysia is expanding trade involving the Organisation of Islamic Countries (OIC) member states.
The bank has envisaged that by end-2009, it would have sufficient Shariah-compliant banking products to cater for the needs of its growing global customers, said managing director/CEO Mohd Fauzi Rahmat. "We are also planning to introduce takaful (Islamic insurance) products by next year," he said in a statement on Monday.
Exim Bank supports the financing needs of Malaysian companies and investors with operations in four continents across two dozen countries worldwide. Asean and Middle East will continue to be major contributors to the bank's portfolio with about two-third of its exposures while Africa, Europe and Asia Pacific make up the rest.
According to Fauzi, the bank is committed to continue its drive to support local exporters and investors extending their international business by providing banking facilities and insurance coverage particularly those that significantly contribute to the extension and enlargement of Malaysia's export volume, value and markets.
While the bank recognise that 2009 would be more a challenging year amidst global economic uncertainties, it would continue to provide support to its existing and potential customers and partners who are willing to take the challenge and participate in the still significant global trade and investments and to be ready for future businesses when the economy picks up.
In 2008, Exim Bank approved a total of RM460.3 million direct loans and guarantees to customers in various sectors including construction, investment, manufacturing and commodity trading.
In addition, the Export Credit Refinancing, extended via participating financial institutions and by far the single largest product of the bank by volume, contributed a total of RM9.5 billion in loan disbursements compared with RM8.4 billion in the previous year.
In trade credit insurance, it has a total of RM2.43 billion business in force in 2008, against RM2.78 billion in 2007. As for commercial and political risk insurance business, the bank approved RM120 million worth of business last year reflecting it cautious approach in light of the global economic crisis.
The total Malaysian exports insured for 2008 amounted to RM2.55 billion and is spread over 72 countries primarily across Asia and Africa.
"Exim Bank maintained a positive and stable performance for both banking and insurance businesses although a more selective approach has been adopted to respond to the current global economic situation," Fauzi said.
To strengthen its capacity to undertake more businesses, the shareholders' funds of Exim Bank has increased to RM2.8 billion in 2008 from RM839 million a year ago. This would go a long way in ensuring that Exim Bank continues to thrive as a vibrant and active Development Financial Institution for Malaysian exporters and investors over the medium and long-term.

(This story appeared in The Malaysian Reserve on July 8, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

Sykt Takaful aims to be largest player

SYARIKAT Takaful Malaysia Bhd (STMB), which has RM4 billion in assets, aims to be the largest takaful insurer in the country in terms of assets within two years.
Group managing director, Datuk Hassan Kamil, said currently, STMB was in second position after Etiqa Takaful Bhd, which has 400,000 policyholders.
He said the company hoped to sign up at least 10 per cent more policyholders within a year of the launch of the one-stop Takaful myDesk in collaboration with Lembaga Tabung Haji.
"Through the Takaful myDesk, the company also hopes to achieve approximately RM1 million worth of contributions, also within the first year of operations," he told reporters after the launch of Takaful myDesk in Kuala Lumpur today.
Hassan said the contributions were expected to be much higher because the customers could also renew their motor policies, buy Takaful mySiswa (education plan) and Takaful myRawat (health insurance in preparation for them to go on haj).
He said the collaboration would also boost its presence with the establishment of Takaful myDesk at selected Tabung Haji (TH) branches nationwide in addition to its present 56 branches.
The TH branches are in Jalan Tun Razak (Kuala Lumpur), Penang, Pasir Puteh (Kelantan), Bagan Serai (Perak), Kuala Pilah (Negeri Sembilan), Kota Tinggi (Johor) and Bentong (Pahang), he said.
"It's a cost-effective distribution network. The partnership allows us to market our products through TH branches," he said.
Under the agreement, Hassan said, STMB would provide facilities such as computers, while TH the space to set up Takaful myDesk.
"We have been studying this proposal for the last six months where we actually identify together with TH the locations where we feel will have the maximum impact," he said.
Hassan said the set-up of MyDesk would be in stages. The TH Jalan Tun Razak branch started operation on June 1 while the Penang branch will commence on August 3.
"Hopefully in the next six months we will be able to cover all the locations," he said.
He said the cost was minimal because technically, what was needed was a computer and the connectivity.
"So, the person sitting at the desk will be online with our takaful system at the head office.
"They can actually issue the certificate and receipts on the spot," he said. - Bernama (22 June 2009)

Takaful Malaysia sees light at the end of tunnel

By Alfean Hardy
Syarikat Takaful Malaysia Bhd is seeing the light at the end of the global economic crisis tunnel and is planning to leverage on the improving e conomy and increasing customer appetite for investment products, its group managing director Datuk Mohamed Hassan Md Kamil said in a recent email interview with The Malaysian Reserve.
"We are of the view that the global economy will slowly stabilise towards the end of this year considering the massive stimulus packages and accommodative monetary policies introduced worldwide to support the downturn," he said. "Since equity markets normally recover a few months ahead of the economy, we expect the local market to steadily recover in the second half of this year.
"Hence, it is timely to offer an investment-linked product with equity exposure to take advantage of the upside when market recovers.
"We believe that investors are constantly looking for the best investible asset to invest in and Takaful myInvest provides them more alternatives to diversify their portfolios while at the same time obtain takaful protection," he added.
Takaful Malaysia recently launched an open-ended investment-linked product, Takaful myInvest, to cater to investors who want takaful protection while looking for alternatives to diversify their portfolios.
The product offers takaful protection in the event of death or total permanent disability during the investment period. It has four different investment funds — Dividend Fund (Irad), Blue Chips Fund (Istifad), Index Tracker Fund (Ihfaz) and Growth Fund (Ittihad) — that can be mixed to suit different investment appetites.
The funds will be invested in Bursa Malaysia-listed Shariah-compliant stocks approved by the Securities Commission's Shariah Advisory Council. The product is also designed to be invested in Islamic deposits and the money market.
Mohamed Hassan said Takaful myInvest is for all types of investors who hold an optimistic view on the equity market's recovery locally and would like to position their investment portfolios to take advantage of that recovery as well as the unlimited upside of potential returns that equity investments offer.
"While we are aware of the opportunities offered in the overseas markets as a result of the financial meltdown, we opine that the risks are also higher, which we need to avoid.
"The local market is more defensive in nature but it also offers tremendous growth," he said. "With the current economic condition, domestic investments would be the most prudent and best way to contain risk exposure.
"The domestic equity market still offers decent earnings in terms of dividend as compared to other regional markets, and money market investment ensures that liquidity is intact while at the same time offering the opportunity of stable returns," he added.
Asked whether Takaful Malaysia had an overseas variant of Takaful myInvest in the pipeline, Mohamed Hassan said the company was constantly working to offer innovative products to its valued customers.
"As such, there are plans on launching more investmentlinked products that will be associated with the performance of foreign investments, for example, structured products, provided that the global sentiment improves and that economic recovery is forthcoming," he said.

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(This story appeared in The Malaysian Reserve on June 10, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)