Etiqa eyes RM7.5b gross written premiums

Tuesday, October 25, 2011, 04.25 PM

Etiqa Insurance and Takaful expects its overall gross written premiums (GWP) to increase to RM7.5 billion by 2015 from RM4.3 billion this year.

Etiqa's current GWP places it second below Great Eastern with GWP amounting to RM5.6 billion.

"It is definitely an achievable target for us considering our solid financial strength and as we increase our GWP from RM2.8 billion in 2006 to RM4.3 billion this year, making us a strong number two in the market," said its chief executive officer Hans de Cuyper.

At a media briefing here today, he said Etiqa Takaful is one of the key players in the development of the takaful industry in Malaysia, being the first takaful company in the world to exceed RM2 billion in contributions in 2011.

He also said the amount  was achieved only three years after its takaful contributions touched RM1 billion.
"We have been able to double the revenues for our takaful business in three years' time and by now we are definitely the biggest takaful company in the world," he added.

He said market position is viewed at a combined basis of the insurance premiums and takaful contributions in relation to other industry players.

Although Etiqa is one brand with two separate entities -- insurance and takaful -- he said he wants both to prosper regardless of where the business flows into.

He added that on a combined basis, Etiqa is the second biggest insurance and takaful company in Malaysia.

"With an institution like Maybank behind us, we are definitely going to achieve and maintain our leadership in takaful and insurance," he said referrrig to the company's 2015 target.

De Cuyper said they have the widest distribution platform in the country with Maybank being the bancassurance partner.

Other moves taken by Etiqa in realising the target are upgrading the infrastructure, optimising operations, introduction of new products and looking into humanising insurance and takaful.

"Our goal is to be the market leader in the Malaysian insurance and takaful industry and we will not lose sight of the goal," he said. --Bernama

Source : http://www.btimes.com.my/Current_News/BTIMES/articles/20111020185428/Article/index_html

 

Etiqa may consider M&A to become largest insurer

Friday October 21, 2011

KUALA LUMPUR: Malayan Banking Bhd's (Maybank) insurance and takaful arm Mayban Ageas Holdings Bhd, better known by the brand name Etiqa, is keeping options open on expansion plans going forward, as it targets to become the country's largest insurer by 2015.

Etiqa, formed four years ago after a merger with Malaysia National Insurance Bhd and Takaful Nasional Sdn Bhd, is 69.05% owned by Maybank with the remainder stake owned by Ageas Insurance International. It distributes insurance and takaful products under the Etiqa brand name.At a media briefing to introduce Etiqa's new senior management line-up, its chief executive officer Hans de Cuyper said the insurer was open to growing either organically or via mergers and acquisitions (M&As), but this would depend on circumstances.

de Cuyper: ‘We believe it (the award of wealth management licences) may be by year-end.’caption

 

He said the insurer had concentrated on organic growth so far as it focused on the merger master plan. “If any potential acquisitions can add to our strength, fit into our financial ambitions and culture, then we may consider it.”.

The insurer targets to be the overall industry leader by 2015 through a strategy of maintaining its position as the largest takaful distributor and growing faster than the industry average for conventional life insurance.
“Based on our own extrapolation, we can be the largest insurer by 2015 by growing top line to RM7.5bil from RM4.3bil currently. That alone will be sufficient to be at the top,” de Cuyper said. The largest insurer by top line at the moment is Great Eastern Life.

De Cuyper said from now until the beginning of next year, the insurer would also be growing market share via the launch of various life and family insurance products. He said this was in line with the industry trend, which was seeing a shift towards more life and family products over general insurance. “Through Maybank's regional footprint, we can also distribute bancassurance and takaful products,” De Cuyper said. He said Etiqa was also gearing up for the award of wealth management licences under the private pension framework that was announced in Budget 2011. “We don't have any indication of when the licences will be given out but we believe it may be by year-end. We're working very hard on this,” de Cuyper said.

Source : http://biz.thestar.com.my/news/story.asp?file=/2011/10/21/business/9738557&sec=business

Takaful-focused insurer bought by run-off investment specialists

Author: Emmanuel Kenning

Source: Insurance Age | 19 Oct 2011

Randall & Quilter has agreed to buy Principle Insurance for £4.275m cash.

 

Principle has been in run-off since October 2009. It was launched and received Financial Services Authority approval in 2008 with the aim of meeting the motor and home insurance needs of the country's Muslim population as the only Shariah-compliant insurance provider in Britain at the time.
The provider, which consists of almost entirely of Takaful motor insurance business, had net reserves of approximately £2.8m on 30 June 2011. The latest available audited accounts to 31 December 2010 revealed a net asset value of £5.1m.

It is the second occasion that the company has announced a sale having previously agreed to dispose of the business to the Al Salam Group with the stated intention at the time of re-commening trading.
Tom Booth, chief financial officer at Randall & Quilter told Insurance Age that the purchase, which will be managed by R&Q Insurance Services, was a good acquisition with relatively short-tail business.
"We aim to run it off effectively and to manage and pay the claims efficiently. Then to wind the company up and extract the [remaining] capital," he said.

Ken Randall, chief executive officer of Randall & Quilter, said of the acquisition: "We are pleased to have reached agreement to acquire Principle and it demonstrates our commitment to find new legacy portfolios which meet our return criteria and have shorter anticipated run-off profiles.
"We have commented that our pipeline has grown in recent times and it is pleasing to report that this heightened activity has now resulted in a run-off company purchase, subject to regulatory approval, expected to be received in the coming months."

Randall & Quilter has a portfolio of nine insurance companies in run-off, from the UK, US and Europe, with net assets £72.2m as at 30 June 2011.

Source : http://www.insuranceage.co.uk/insurance-age/news/2118260/takaful-focused-insurer-bought-run-investment-specialists#ixzz21WanH7dm

Takaful Malaysia To Pay RM9.36 Million Dividend

October 19, 2011 20:18 PM

KUALA LUMPUR, Oct 19 (Bernama) -- Syarikat Takaful Malaysia Berhad (Takaful Malaysia) announced Wednesday its declaration of interim dividend of 7 per cent which will result in a payout amounting to RM9.36 million for its financial year ending Dec 31, 2011.

The company said in a statement dividend payments will be made on Dec 2 to depositors who transfer shares into their securities account before 4pm on Nov 11.

"The Group recorded operating revenue of RM636.2 million comprising RM532.5 million in gross contribution and RM103.7 million in investment income during the financial period ended June 30, representing an increase of 8.3 per cent over the same period last year of RM587.2 million," said Takaful Malaysia Group managing director Datuk Mohamed Hassan Kamil.

He said the Group also attained a favourable profit before zakat and taxation of RM49.9 million, representing a growth of 134 per cent over the same period last year of RM21.3 million.

On the six months financial result, Mohamed Hassan said the gross contribution was mainly attributable to its Family Takaful Group business, motor and fire class of business.

He added the company's new distribution channel, the 'Wakalah' or retail agency model launched in March 2010, was the main contributor to its Family Takaful Group business.

-- BERNAMA
Source : http://www.bernama.com.my/bernama/v5/newsindex.php?id=621065

Time to move to takaful 2.0
By Rushdi Siddiqui, Special to Gulf News
Published: 00:00 October 16, 2011

Industry must address challenges size, representative industry body, and perception.

A conference on the future and expansion of takaful, called Takaful Rendezvous 2011, took place in Malaysia under the banner of Kuala Lumpur Islamic Finance Forum (KLIFF) from October 4 to 6. Although the industry has come far in a short period of time, more needs to be done.

Much like the $640-billion (Dh2.35 trillion) halal industry, takaful needs to rise and address some of the challenges on size, representative industry body, and perception.

The known challenges in the takaful are well documented: human capital development, regulations, distribution channels, Sharia structures, governance and transparency, investment options, retakaful, and so on. Thus, at one level, takaful is encountering similar issues to Islamic finance and banking but has matured less.

Three takeaways

Today, we have, at last count, more than 177 takaful operators, predominantly in the GCC region and Malaysia. Yet this represents only single digit percentage penetration in all Muslim countries except Malaysia. The existing scenario implies three possible takeaways:

1. Muslims (in OIC countries) have yet to buy in into the takaful story on a larger scale, because existing ways and means addresses their needs. Their children and community/mosque act as de-facto ‘takaful operators'. The attitude may be: what they have is Sharia compliant and it works for their particular needs in the jurisdictions they reside.

2. The education and awareness of what takaful is, how it is compliant, and how it benefits them is a time-drawn process. It requires patient commitment and ongoing resources from the operators. The initial ‘returns' can be classified as awareness and institutional brand building, i.e., the ‘good-will' foundation for financial returns.

3. Takaful, much like the halal industry, has not ‘linked' well with the Islamic finance story, although both are very much a part of the latter. When takaful premiums are less than $10 billion and most operators are small in size, it needs to be a holistic and integrated part of the anchor story of Islamic finance.

One simple acid test is news coverage: How many takaful stories appear in the western media compared to Islamic finance? How many meaningful stories on takaful in Muslim country media vis-à-vis Islamic finance and halal industry?

Mega operator

Today, the conversation in Islamic finance is about an Islamic mega bank to offset small paid-up capital with size, to have a larger balance sheet to better compete with Islamic subsidiaries and home-country conventional banks, and to have impact on investing and financing. However, today's takaful conversation is often times on micro-takaful, much like micro-finance, to serve the under-served.

Some Muslim countries are Islamically over-banked and over-takaful compared to population size, resulting in margin-reducing (destructive) competition. If an Islamic bank or takaful operator, compared to conventional counter-parts, declares bankruptcy, it may actually result in a confidence crisis and systemic risk for the embryonic Islamic finance industry. Thus, the unique situation of ‘too small to fail' risk exists in the Islamic finance.

For example, witness the selected western media ‘frenzy' when Kuwait's Investment Dar, defaulted on its sukuk obligation or the United States' East Cameron gas sukuk went into bankruptcy.

The conversation in the takaful industry must also include establishing a mega takaful operator, either via consolidation or licence, as the status quo may not be conducive to for industry's growth and development. To offset fears of uncompetitive behaviour of larger size Islamic banks and takaful operators, there are regulations plus option of reaching out to the Sharia board, via the Sharia liaison officer or department, of such institutions for ‘anti-competitive' behaviour.

Industry body

Who is the spokesperson for the takaful industry? We have exposure to issues in takaful by industry bodies such as Islamic Financial Services Board (IFSB), and Accounting & Auditing Organisation of Islamic Financial Insititutions (AAOIFI), but a dedicated industry body is the need of the hour. The push back in certain quarters has been that it is premature to have an industry body. The same response was also articulated pre-1991 when AAOIFI was established.

The first order of business is the location of the proposed takaful industry body: the UAE or Qatar over Bahrain and Malaysia. To date, we do not have an Islamic industry body in either the UAE or Qatar, hence, an opportunity for these countries to contribute as important stakeholders in Islamic finance. Information about Islamic finance should not just be available in Bahrain and Malaysia, the two leading hubs of Islamic industry.

Global ‘go-to' point

The second and more important function of a proposed takaful industry body is what should be the role and responsibilities? It will address the well known issues, but something more is required. We need a global ‘go-to' point and clearing base of information for takaful to avoid continued fragmentation and move towards standardisation.

Thus, takaful's time has come to move towards 2.0, with stronger links to Islamic finance, where less may be better and a dedicated industry body explaining the DNA of takaful.

The writer is Global Head, Islamic Finance & OIC Countries. Opinion expressed here is the writer's own and does not reflect that of his own organisation and that of Gulf News.
 
Source : http://gulfnews.com/business/opinion/time-to-move-to-takaful-2-0-1.892539

RBC framework for takaful expected next year
Tuesday July 26, 2011

SERI KEMBANGAN: The risk-based capital (RBC) framework for the takaful industry is expected to be implemented in the first half of next year, paving the way for stricter capital requirements for Islamic insurance.

The move would enable takaful players to hold appropriate level of capital to undertake risks in their daily operations.

Takaful Ikhlas Sdn Bhd president and chief executive officer Datuk Syed Moheeb Syed Kamarulzaman said currently the exposure draft of the framework had been released and feedback was being collected from the market.

“We do not expect any delay in the implementation for the RBC framework for the takaful industry as it has been talked in the industry for a while. Unlike the conventional RBC framework, which was given a one-year period for compliance, we expect the actual execution for the RBC to be in a much shorter timeframe,’’ he told a briefing at the 1st Malaysia Insurance Summit 2011.

Moheeb, who is also the chairman of the Malaysian Takaful Association (MTA), said he was upbeat that all the takaful players would be able to comply with the framework upon its implementation.

He said there were one or two takaful companies currently “fine tuning” their portfolio to meet the framework.

Asked on the portfolio mix of the RBC for takaful compared with the RBC for conventional insurers, he said it would be slightly different as there might be heavier loans for credit-base weightage for the former resulting in higher charges for some takaful players under the takaful framework. This is in view of larger loans portfolio for Islamic finance coupled with lesser number of players in the takaful market.

The RBC framework for the conventional insurance sector came on stream in January 2009.

Under the conventional framework, insurance companies are required to have a minimum of 130% of supervisory capital-adequacy ratio.

The capitalisation of the insurance industry currently is strong at a CAR of 224.6%.

At present there are 11 takaful operators and three retakaful operators with another retakaful operator about to join the stable.

According to Moheeb, this year he expected the growth rate for the industry to exceed 20% for the family and general takaful business, higher than the previous year, with the inclusion of three new family takaful operators into the market.

Meanwhile, The Malaysian Insurance Institute (MII) CEO Khadijah Abdullah said the insurance industry as a whole was projected to grow by 12% this year supported, amongst others, by the Government’s various stimulus plans and other legislative initiatives as well as the historically low interest rate environment.

According to the Life Insurance Association of Malaysia (LIAM) that in addition to these numerous initiatives announced in the Economic Transformation Programme, including the private pension plan and worker insurance scheme, economic conditions in the country are ripe for further life insurance development.

She added the current consumer confidence in Malaysia has also shown marked improvement, rising to 107 points on the latest Nielsen Global Consumer Confidence Index - its highest score since the third quarter of 2006.

The General Insurance Association of Malaysia (PIAM) meanwhile reported that, in absence of any further adverse impacton the world economy, the association foresees the outlook for the general insurance industry this year to be positive with an increased demand for insurance in all areas.

Likewise, MTA also expects the Islamic insurance industry to continue to improve on its 10% market penetration, particularly by expanding into rural areas.

Khadijah said Malaysia and other Asean insurance markets should consider implementing the proposed Solvency II framework to be launched next year in the European Union (EU) so as to synergise the domestic industries as to be at par with other advanced markets.

This new framework would create a new scenario for the EU insurance legislations to facilitate the development of a single market in insurance services in Europe, whilst at the same time securing an adequate level of consumer protection, she noted.

Source : http://biz.thestar.com.my/news/story.asp?file=/2011/7/26/business/9169724&sec=business#13190127243991&if_height=636

RAM: Increasing demand for takaful in M’sia
Tuesday April 12, 2011

PETALING JAYA: Malaysia has successfully propelled the takaful industry to the next level, says RAM Rating Services Bhd.

Driven by increasing demand, the takaful industry has evolved from one that only contained a single player with limited basic products to a viable sector that has been integrated into the mainstream financial system, the rating agency said in a statement yesterday.

“While not as prominent as the overall Islamic banking industry, takaful is marching ahead at its own pace with a 20% to 26% year-on-year growth in terms of total assets and contributions between 2004 and 2009,” it said.

According to the agency’s head of Islamic ratings Zakariya Othman, the Government has been the major force behind the domestic growth of takaful and its success.

He said Malaysia’s established regulatory and legal frameworks have given the country an edge over other jurisdictions.

“The industry’s strong syariah framework helps nurture consumer confidence and also provides greater flexibility to takaful operators, encouraging them to be innovative within the boundaries of syariah,” he explained.

Despite the clear domestic and global growth of the takaful industry, however, Zakariya noted that there were still concerns and challenges that could hinder industry operators’ efforts to become prominent players in the financial realm.

One of the lingering concerns, he pointed out, involved liquidity, and the other was the lack of long-term instruments.

“Takaful operators need to match their long-term liabilities with long-term assets, to be able to expand their array of products and business propositions,” he said.

Source : http://biz.thestar.com.my/news/story.asp?file=/2011/4/12/business/8462960&sec=business#13188378846371&if_height=404