Robust and a world leader in the Islamic way
Friday October 7, 2011
ON July 1, 2011, the Shariah Governance Framework was implemented to further strengthen the oversight role, authority, accountability, independence and competency of the Board of Directors, the Shariah Committee and the Management of the Ismanic financial institutions on shariah matters.
Two Islamic indexes were launched in the first half of 2011, namely the Bloomberg Malaysian Foreign Currency Sukuk Index and Bloomberg-AIBIM-Bursa Malaysia Sovereign Shariah Index.
The first is a non-ringgit denominated index developed in conjunction with Bank Negara, which provides a global benchmark for the performance of sukuk and the ability to track movements of foreign currency issuances.
The second index is a collaboration between Bloomberg Association of Islamic Banks in Malaysia and Bursa Malaysia, which provides a performance benchmark for shariah compliant ringgit denominated Government securities to investors.
As at end July 2011, 847 shariah-compliant securities were hosted on Bursa Malaysia, representing 89% of total listed securities with a market capitalisation of RM826bil or 61.7% of total market capitalisation (end 2010: RM756.1bil; RM59.3%).
The trading volume of shariah-compliant securities rose to 111.5bil units or 59.4% of the total 187.7bil units traded during the first seven months of 2011 (Jan - July 2010: 88.5bil units; 66.4%; 133.9bil units.
Malaysia remained a leader in the global sukuk market outstanding as at end of the first half of 2011.
Bursa Malaysia is also the top sukuk listing destination, with 19 sukuk totalling RM88.3bil as at end July 2011 (US$29.6bil).
During the first seven months of 2011, one Islamic fund management licence was approved, bringing the number of full-fledged Islamic fund management companies to 16 (end 2010: 15 companies).
During the same period, eight Islamic unit trust funds were launched, reaching a total of 160 funds set up with a total net asset value of RM26.4bil as at end July 2011 (end 2010: 152 funds; RM24bil).
Total Islamic wholesale funds launched stood at 24 with an additional five funds launched during the first seven months of 2011 (end 2010: 19 funds).
The size of the Islamic wholesale funds in terms of net asset value (NAV) was RM7bil as at end July 2011 (end 2010: RM4.2bil).
Meanwhile, one Islamic exchange traded fund is listed with a NAV of RM579mil (end 2010: 1 ETF; RM626mil) while Islamic real estate investment trusts (REITs) stood at three with a market capitalisation of RM2.5bil as at end June 2011 (end 2010: 3 REITs; RM2.3bil).
The takaful industry continued to grow in the first seven months of 2011 underpined by increased domestic economic activities.
Assets of the takaful industry grew 16.8% to RM16.3bil, accounting for 8.7% of total assets in the insurance and takaful sector (Jan - July 2010: 19.5%; RM13.9bil; 8.3%)
New business contribution for family takaful declined slightly by 1.1% to RM1.58bil (Jan - July 2010: 25.8%; RM1.59bil), due to lower contributions in endowment products.
However, market penetration rate of family takaful improved to 12.1% as at July 2011 (end 2010: 10.9%)
For the general takaful sector, gross direct contributions increased 18.1% to RM917.5mil (Jan - July 2010: 27.6%; RM776.7mil) due to higher contributions from motor and medical businesses.
However, operating profits for the sector declined 32.7% to RM103.6mil (Jan - July 2010: RM154mil) due to higher net claims incurred mainly in the motor class business during the period.
Source : http://thestar.com.my/news/story.asp?file=/2011/10/7/ecoreport/9642040&sec=ecoreport
Monday, October 17, 2011
Maybank to keep lead in takaful
Friday July 25, 2008
KUALA LUMPUR: Malayan Banking Bhd (Maybank) is confident of maintaining its position as the largest takaful operator in Malaysia after receiving good response for its latest product, Takaful Al-Waqi.
Since the soft launch on Monday, it has collected about RM30mil subscription from investors. Etiqa Takaful Bhd, the insurance and takaful division of Maybank, is in charge of distributing the fund.
Maybank executive vice president, head Bancassurance Ibrahim Muhammad said 95% of subscribers were individuals and the rest from institutions.
“We are confident that in two to three weeks time, the institutions will come in. We believe within this month, the whole fund totalling RM200mil will be fully subscribed,” he said during the launch yesterday.
Takaful Al-Waqi is a short tenure investment of two years with potential upside of 8.81% per annum. About 90% of the fund will be invested in shariah-compliant fixed income investments. The rest will be invested in shariah-compliant investment instruments that are referenced to the performance of an optimised commodity index for potential upside returns.
Etiqa Takaful deputy chief executive officer Amirudin Abd Halim said the fund needed to be invested according to what was allowed in Islamic law.
“We choose four broad-based commodity baskets members - energy, industrial metals, precious metal and agriculture sector - as they are all shariah-compliant,” he said.
Chief financial officer/executive director Hans De Cuyper said commodities, such as metals, were in demand.
“The rising of China and India as industrial players commands a huge demand for metals for their development.
“That's why we are investing in commodities, as they are not really affected even during economic softening,” he said.
Takaful Al-Waqi, which is open to customers aged 18 to 70 with a minimum single investment of RM20,000, is available at its 21 Etiqa Takaful branches.
Source : http://biz.thestar.com.my/news/story.asp?file=/2008/7/25/business/21914704&sec=business
Friday July 25, 2008
KUALA LUMPUR: Malayan Banking Bhd (Maybank) is confident of maintaining its position as the largest takaful operator in Malaysia after receiving good response for its latest product, Takaful Al-Waqi.
 |
| From left: Maybank executive vice president head bancassurance Ibrahim Muhammad, Etiqa Takaful Berhad chief financial officer/executive director Hans De Cuyper and Etiqa Takaful Berhad deputy chief executive officer Amirudin Abdul Halim during the launch |
Since the soft launch on Monday, it has collected about RM30mil subscription from investors. Etiqa Takaful Bhd, the insurance and takaful division of Maybank, is in charge of distributing the fund.
Maybank executive vice president, head Bancassurance Ibrahim Muhammad said 95% of subscribers were individuals and the rest from institutions.
“We are confident that in two to three weeks time, the institutions will come in. We believe within this month, the whole fund totalling RM200mil will be fully subscribed,” he said during the launch yesterday.
Takaful Al-Waqi is a short tenure investment of two years with potential upside of 8.81% per annum. About 90% of the fund will be invested in shariah-compliant fixed income investments. The rest will be invested in shariah-compliant investment instruments that are referenced to the performance of an optimised commodity index for potential upside returns.
Etiqa Takaful deputy chief executive officer Amirudin Abd Halim said the fund needed to be invested according to what was allowed in Islamic law.
“We choose four broad-based commodity baskets members - energy, industrial metals, precious metal and agriculture sector - as they are all shariah-compliant,” he said.
Chief financial officer/executive director Hans De Cuyper said commodities, such as metals, were in demand.
“The rising of China and India as industrial players commands a huge demand for metals for their development.
“That's why we are investing in commodities, as they are not really affected even during economic softening,” he said.
Takaful Al-Waqi, which is open to customers aged 18 to 70 with a minimum single investment of RM20,000, is available at its 21 Etiqa Takaful branches.
Source : http://biz.thestar.com.my/news/story.asp?file=/2008/7/25/business/21914704&sec=business
Maybank unit eyes RM14mil premium from new product
Saturday August 9, 2008
KUALA LUMPUR: Malayan Banking Bhd's (Maybank) insurance and takaful arm, Etiqa, is eyeing RM14mil in premiums from its newly launched BizPac.
It hopes to achieve this by riding on the growing number of small and medium enterprises (SMEs) in the country.
“According to Ministry of International Trade and Industry, there are about 590,000 SMEs in Malaysia,'' said executive vice-president (enterprise corporate), Shahrul Azuan Mohamed, at the launch of BizPac yesterday.
“It is a big market that we want to tap together with Maybank and provide the necessary support to protect the businesses and interests of the SMEs.”
BizPac is a package for SMEs involved in the manufacturing industry. It is a financial solution designed to assist proprietors manage their business and be protected in the event of unfortunate incidents.
“We provide real-time response which allows proprietors to assess their premium upfront using a single-premium methodology (where premium is computed as a single sum and will result in less documentation).
“With this feature, it provides the convenience to proprietors as it gives instant information on their premium to assist and expedite their decision and the convenience of a single-proposal form for their various insurance classes,” he said. – Bernama
Source : http://biz.thestar.com.my/news/story.asp?file=/2008/8/9/business/22041930&sec=business
Saturday August 9, 2008
KUALA LUMPUR: Malayan Banking Bhd's (Maybank) insurance and takaful arm, Etiqa, is eyeing RM14mil in premiums from its newly launched BizPac.
It hopes to achieve this by riding on the growing number of small and medium enterprises (SMEs) in the country.
“According to Ministry of International Trade and Industry, there are about 590,000 SMEs in Malaysia,'' said executive vice-president (enterprise corporate), Shahrul Azuan Mohamed, at the launch of BizPac yesterday.
“It is a big market that we want to tap together with Maybank and provide the necessary support to protect the businesses and interests of the SMEs.”
BizPac is a package for SMEs involved in the manufacturing industry. It is a financial solution designed to assist proprietors manage their business and be protected in the event of unfortunate incidents.
“We provide real-time response which allows proprietors to assess their premium upfront using a single-premium methodology (where premium is computed as a single sum and will result in less documentation).
“With this feature, it provides the convenience to proprietors as it gives instant information on their premium to assist and expedite their decision and the convenience of a single-proposal form for their various insurance classes,” he said. – Bernama
Source : http://biz.thestar.com.my/news/story.asp?file=/2008/8/9/business/22041930&sec=business
BNM: Takaful players should invest in technology, distribution channels
Posted on October 7, 2011, Friday
KUALA LUMPUR: Takaful players must invest in technology, people and distribution channels as strategies to enhance their ability to tap the cross-border takaful business, Bank Negara Malaysia’s (BNM) assistant governor Bakarudin Ishak said yesterday.
He said strong global gross takaful contribution growth trends, averaging about 31 per cent, had been forecasted to hit US$12 billion (US$1=RM3.11) by year-end from US$7 billion in 2009.
“This signifies positive growth potential in years to come, particularly to the present very low rate of takaful market penetration,” he said in his keynote address at the Takaful Rendezvous 2011 here yesterday.
Bakarudin said takaful and retakaful markets’ potentials were recognised by major conventional players as evident by the setting up of takaful or retakaful companies within a number of large conventional groups from the US, UK and Germany.
He said takaful operators, who numbered more than 150, were set to increase, thus reinforcing the competitive element in the takaful business. Being the world’s largest takaful market, Malaysia has a strong presence in the takaful market globally, with total assets worth US$3.2 billion that dominated 26 per cent of the total global takaful assets in 2009.
The domestic takaful industry’s healthy growth and strong performance, with a compound average 27 per cent growth in terms of net contribution between 2005 and 2010 illustrated the increase in takaful coverage as the preferred option.
Moving forward, Bakarudin said the takaful industry had to seek the best solutions to propel its growth at a faster pace.
He said efficiency strength could be achieved through investments in systems and technology.
“A more advanced back-end system and up-to-date structured information retention and data mining system will allow operators to conduct more comprehensive analysis to understand its target market better,” he said.
Given the current culture of consumers who leveraged on information technology in their daily lives, takaful operators might also further develop the systems to facilitate this.
Bakarudin said investments in people would secure continuous success of the takaful industry and like other financial services providers, takaful operators have to invest in efficient and cost-effective distribution channels. — Bernama
Source : http://www.theborneopost.com/2011/10/07/bnm-takaful-players-should-invest-in-technology-distribution-channels/
Posted on October 7, 2011, Friday
KUALA LUMPUR: Takaful players must invest in technology, people and distribution channels as strategies to enhance their ability to tap the cross-border takaful business, Bank Negara Malaysia’s (BNM) assistant governor Bakarudin Ishak said yesterday.
He said strong global gross takaful contribution growth trends, averaging about 31 per cent, had been forecasted to hit US$12 billion (US$1=RM3.11) by year-end from US$7 billion in 2009.
“This signifies positive growth potential in years to come, particularly to the present very low rate of takaful market penetration,” he said in his keynote address at the Takaful Rendezvous 2011 here yesterday.
Bakarudin said takaful and retakaful markets’ potentials were recognised by major conventional players as evident by the setting up of takaful or retakaful companies within a number of large conventional groups from the US, UK and Germany.
He said takaful operators, who numbered more than 150, were set to increase, thus reinforcing the competitive element in the takaful business. Being the world’s largest takaful market, Malaysia has a strong presence in the takaful market globally, with total assets worth US$3.2 billion that dominated 26 per cent of the total global takaful assets in 2009.
The domestic takaful industry’s healthy growth and strong performance, with a compound average 27 per cent growth in terms of net contribution between 2005 and 2010 illustrated the increase in takaful coverage as the preferred option.
Moving forward, Bakarudin said the takaful industry had to seek the best solutions to propel its growth at a faster pace.
He said efficiency strength could be achieved through investments in systems and technology.
“A more advanced back-end system and up-to-date structured information retention and data mining system will allow operators to conduct more comprehensive analysis to understand its target market better,” he said.
Given the current culture of consumers who leveraged on information technology in their daily lives, takaful operators might also further develop the systems to facilitate this.
Bakarudin said investments in people would secure continuous success of the takaful industry and like other financial services providers, takaful operators have to invest in efficient and cost-effective distribution channels. — Bernama
Source : http://www.theborneopost.com/2011/10/07/bnm-takaful-players-should-invest-in-technology-distribution-channels/
Etiqa Takaful Berhad "The Most Outstanding Takaful Company, Four Years In A Row"
Kuala Lumpur – Etiqa Takaful Berhad was awarded as ‘The Most Outstanding Takaful Company’ during the KLIFF Islamic Finance Awards 2011 at Istana Hotel recently, making it the fourth year in a row for Etiqa Takaful Berhad to be the winner of this accolade since 2008.
On hand to receive this prestigious award from Y.B. Tan Sri Nor Mohamed Yakcop, Minister in the Prime Minister’s Department, was Shahril Azuar Jimin, Chief Executive Officer of Etiqa Takaful Berhad. The ceremony was witnessed by Abdul Aziz Abdul Jalal, Director of Kuala Lumpur Islamic Finance Forum (KLIFF) 2011.
“Winning this award is indeed a strong testimony of Etiqa Takaful’s leadership in the takaful market. What is even more encouraging is the fact that we have won this for four consecutive years from 2008 to 2011,” said Shahril.
The KLIFF Islamic Finance Awards is meant to honor, recognize and acknowledge the significant effort and contributions of individuals and institutions in developing the Islamic finance industry. “The group’s effort of positioning the Etiqa brand in the forefront of the insurance and takaful industry is indeed the winning factor. More importantly, Etiqa Takaful Berhad is the first takaful operator to have reached the contribution mark of RM 2 billion (USD 700 million) which is believed to be the highest in the world for a direct takaful writer,” commented Hans De Cuyper, CEO of Etiqa Insurance and Takaful.
More than 500 Islamic finance leaders from all over the world attended the awards presentation dinner last night where more than 10 categories of awards were given out in recognition of outstanding performance and development in the Islamic banking and finance field.
Most Outstanding Takaful Company award: (from left) Hans De Cuyper, Chief Executive Officer of Etiqa Insurance and Takaful and Shahril Azuar Jimin, Chief Executive Officer of Etiqa Takaful Berhad
“Since the launch of the Etiqa brand in November 2007 with the brand platform of humanizing insurance and takaful, we have taken every effort to ensure that the brand is cascaded to every single member of the Etiqa family. Our attributes are encapsulated in our behavior, work culture, how we treat our customers, even to the extent of our products and services. We have simplified processes and empowered our people to give customers positive experiences when dealing with us. This is the Etiqa difference,” added Shahril.
Kuala Lumpur Islamic Forum (KLIFF) has been held annually since year 2004 and the 8th KLIFF 2011 is currently held at Istana Hotel, Kuala Lumpur between October 3rd – 7th, 2011 to offer an integrated basis for promoting Islamic financial system dialogue among speakers and delegates to foster the orderly development of an efficient, competitive, sound and innovative Islamic finance.
Source : http://www.etiqa.com.my/English/Pages/default.aspx
Kuala Lumpur – Etiqa Takaful Berhad was awarded as ‘The Most Outstanding Takaful Company’ during the KLIFF Islamic Finance Awards 2011 at Istana Hotel recently, making it the fourth year in a row for Etiqa Takaful Berhad to be the winner of this accolade since 2008.
 |
| Shahril Azuar Jimin, Chief Executive Officer of Etiqa Takaful Berhad receiving the Most Outstanding Takaful Company award from Y.B. Tan Sri Nor Mohamed Yakcop, Minister in the Prime Minister’s Department and witnessed by Abdul Aziz Abdul Jalal, Director of Kuala Lumpur Islamic Finance Forum and Mohd Redza Shah Abdul Wahid, Chief Executive Officer of Bank Muamalat Malaysia Berhad. |
On hand to receive this prestigious award from Y.B. Tan Sri Nor Mohamed Yakcop, Minister in the Prime Minister’s Department, was Shahril Azuar Jimin, Chief Executive Officer of Etiqa Takaful Berhad. The ceremony was witnessed by Abdul Aziz Abdul Jalal, Director of Kuala Lumpur Islamic Finance Forum (KLIFF) 2011.
“Winning this award is indeed a strong testimony of Etiqa Takaful’s leadership in the takaful market. What is even more encouraging is the fact that we have won this for four consecutive years from 2008 to 2011,” said Shahril.
The KLIFF Islamic Finance Awards is meant to honor, recognize and acknowledge the significant effort and contributions of individuals and institutions in developing the Islamic finance industry. “The group’s effort of positioning the Etiqa brand in the forefront of the insurance and takaful industry is indeed the winning factor. More importantly, Etiqa Takaful Berhad is the first takaful operator to have reached the contribution mark of RM 2 billion (USD 700 million) which is believed to be the highest in the world for a direct takaful writer,” commented Hans De Cuyper, CEO of Etiqa Insurance and Takaful.
More than 500 Islamic finance leaders from all over the world attended the awards presentation dinner last night where more than 10 categories of awards were given out in recognition of outstanding performance and development in the Islamic banking and finance field.
Most Outstanding Takaful Company award: (from left) Hans De Cuyper, Chief Executive Officer of Etiqa Insurance and Takaful and Shahril Azuar Jimin, Chief Executive Officer of Etiqa Takaful Berhad
“Since the launch of the Etiqa brand in November 2007 with the brand platform of humanizing insurance and takaful, we have taken every effort to ensure that the brand is cascaded to every single member of the Etiqa family. Our attributes are encapsulated in our behavior, work culture, how we treat our customers, even to the extent of our products and services. We have simplified processes and empowered our people to give customers positive experiences when dealing with us. This is the Etiqa difference,” added Shahril.
Kuala Lumpur Islamic Forum (KLIFF) has been held annually since year 2004 and the 8th KLIFF 2011 is currently held at Istana Hotel, Kuala Lumpur between October 3rd – 7th, 2011 to offer an integrated basis for promoting Islamic financial system dialogue among speakers and delegates to foster the orderly development of an efficient, competitive, sound and innovative Islamic finance.
Source : http://www.etiqa.com.my/English/Pages/default.aspx
Wednesday, October 5, 2011
Takaful market set to grow in S. Africa and beyond
By MUSHTAK PARKER | ARAB NEWS
Published: Sep 18, 2011 23:37 Updated: Sep 19, 2011 16:01
Another sign that the mainstream banks in South Africa are taking Islamic finance as a serious niche market business is the acquisition last week of the local Islamic insurance company, Takafol SA, by Absa, one of the republic's largest banking groups.
In a deal which could have implications for the reach of Takaful (Islamic insurance) beyond the borders of South Africa to southern, central, West and East Africa, Absa Insurance Company Limited (AIC), a wholly-owned subsidiary of Absa Financial Services Limited (AFS), bought the book of business of Takafol South Africa (Pty) Limited (Takafol SA), which is a subsidiary of the Hannover Reinsurance Group, a major global reinsurer, and which was established in 2003.
The Takaful premium market in South Africa is currently estimated at about 3 billion South African rands (about $420 million), which is very modest compared to the conventional insurance market. As such market penetration potential is huge because of the low base, especially in country with a fast growing population of over 45 million of which only about 3 million are Muslim, but with a relatively largish affluent Muslim middle class.
Islamic banking has been around in South Africa since 1989, when Albaraka Bank South Africa, now a joint venture between the Saudi-owned Albaraka Banking Group and UK-based DCD London & Mutual Plc, was licensed by the Reserve Bank of South Africa, the central bank. Over the last decade or so, the mainstream banks in South Africa, where banking is a lucrative business because of some of the highest banking charges in the world, have started to show interest in offering Shariah-compliant products initially at home and now increasing in Sub-Saharan Africa as far as Nigeria and Tanzania.
They include First National Bank (FNB); ABSA, in which Barclays Bank Plc of the UK has a 55.5 percent stake; Nedbank and Standard Bank - all of which have thriving Islamic banking windows and which have overtaken Albaraka Bank SA in terms of book business and branch reach. Albaraka Bank SA for instance has only 11 branches in the country, including the headquarters. Not surprisingly, Albaraka Bank SA has an agreement in place with Standard Bank and Absa whereby its customers can deposit funds into their accounts via Absa or Standard Bank branches.
Banks such as Absa and Standard Bank have clear strategies of growth and expansion beyond South Africa to sub-Saharan Africa, and Islamic banking and insurance are an attractive component of this offering especially in countries with large and affluent Muslim populations.
At the same time banks offering Islamic financial products in the “rainbow republic” are encouraged by the increasingly proactive policy of the South African government of President Jacob Zuma, toward the facilitation of Islamic finance in the country under financial inclusion policy and other reasons.
The South African National Treasury has introduced tax neutrality measures for Mudaraba, Murabaha and Diminishing Musharaka products and emphasized that "the development of Islamic finance in South Africa is critical to the expansion of National Treasury's strategy to position South Africa as a gateway into Africa. The Treasury envisages South Africa being a central hub for Islamic product development and ensuring the rollout of such products into African markets."
South African Finance Minister Pravin Gordhan, introducing the Taxation Laws Amendment Bills 2010 in the National Assembly in Cape Town in August 2010, gave further insight into the government's rationale for the tax changes relating to the Islamic financial products.
"South Africa is an ideal location for multi-nationals to base their regional operation for investments into sub-Saharan Africa. South Africa offers world-class financial services, strong and clear financial regulatory architecture and world-class infrastructure ... Certain domestic tax anomalies, the exchange control regime and fierce competition from certain low tax countries, remain stumbling blocks to South Africa taking full advantage of the opportunities that are available. An important area of innovation relates to the growing use of Islamic financing, which contains certain prohibitions in respect of finance, including prohibitions against interest, immoral substances and the lack of transparency in respect of investments. At issue is the tax system's lack of recognition of Islamic finance, as it mainly focuses on traditional forms of finance. The proposed amendments will level the playing field in respect of certain Islamic financial products when undertaking savings and investments and when attempting to bank finance," explained Gordhan.
Standard Bank and Absa are spearheading this Islamic finance foray into the African continent. In July the Central Bank of Nigeria, for instance, gave approval to Stanbic IBTC Bank, the Nigerian subsidiary of Standard Bank, a license to set up an interest-free Islamic banking subsidiary subject to complying with the approval terms within six months. In Tanzania, Standard Bank has also launched a number of Islamic consumer finance products including Islamic mortgages, leasing, business account facilities and Takaful.
Absa at the same time has an established and dedicated Absa Islamic banking brand and window. With the acquisition of Takafol SA, which is awaiting final approval from the banking and insurance regulator, Absa is keen to build an additional brand, Absa Takaful.
In fact, Takafol SA has a history with the Absa Group through its underwriting relationship with Absa Insurance Company Limited (AIC). In 2008, Takafol SA appointed AIC their underwriting partner and this relationship, according to both parties, contributed to Takafol SA's further development, with personal lines and commercial business growing by more than 66 percent over the next two years.
Takafol SA offered short-term Takaful for business, vehicle, personal and household cover. The merger of Takafol SA into AIC will bring many economies of scale including direct control over underwriting and pricing, and greater clarity and certainty in terms of global standards of Shariah governance.
Absa Takaful will be headed by Uwaiz Jassat, Takafol SA's CEO, who will report to Edwyn O'Neill, managing director of Absa Insurance Company. At the announcement of the acquisition, O,Neill emphasized that "this deal demonstrates Absa's commitment to provide the Islamic community with a holistic financial services offering that is Shariah-compliant. Today, we cement our relationship with the Islamic community and recognize that there is a need for similar products in the rest of Africa."
Takaful provision in South Africa is so underdeveloped and incestuous that other banks such as Albaraka SA offers Takaful services to it clients through its association with Takafol SA. Albaraka Bank SA has close relations with Absa, which also manages its Islamic equity fund offerings.
However, this may also be a cue for Takaful providers from abroad to think about using South Africa as a gateway to spearhead Takaful business into new markets in Sub-Saharan Africa.
Source : http://arabnews.com/economy/islamicfinance/article503525.ece
By MUSHTAK PARKER | ARAB NEWS
Published: Sep 18, 2011 23:37 Updated: Sep 19, 2011 16:01
Another sign that the mainstream banks in South Africa are taking Islamic finance as a serious niche market business is the acquisition last week of the local Islamic insurance company, Takafol SA, by Absa, one of the republic's largest banking groups.
In a deal which could have implications for the reach of Takaful (Islamic insurance) beyond the borders of South Africa to southern, central, West and East Africa, Absa Insurance Company Limited (AIC), a wholly-owned subsidiary of Absa Financial Services Limited (AFS), bought the book of business of Takafol South Africa (Pty) Limited (Takafol SA), which is a subsidiary of the Hannover Reinsurance Group, a major global reinsurer, and which was established in 2003.
The Takaful premium market in South Africa is currently estimated at about 3 billion South African rands (about $420 million), which is very modest compared to the conventional insurance market. As such market penetration potential is huge because of the low base, especially in country with a fast growing population of over 45 million of which only about 3 million are Muslim, but with a relatively largish affluent Muslim middle class.
Islamic banking has been around in South Africa since 1989, when Albaraka Bank South Africa, now a joint venture between the Saudi-owned Albaraka Banking Group and UK-based DCD London & Mutual Plc, was licensed by the Reserve Bank of South Africa, the central bank. Over the last decade or so, the mainstream banks in South Africa, where banking is a lucrative business because of some of the highest banking charges in the world, have started to show interest in offering Shariah-compliant products initially at home and now increasing in Sub-Saharan Africa as far as Nigeria and Tanzania.
They include First National Bank (FNB); ABSA, in which Barclays Bank Plc of the UK has a 55.5 percent stake; Nedbank and Standard Bank - all of which have thriving Islamic banking windows and which have overtaken Albaraka Bank SA in terms of book business and branch reach. Albaraka Bank SA for instance has only 11 branches in the country, including the headquarters. Not surprisingly, Albaraka Bank SA has an agreement in place with Standard Bank and Absa whereby its customers can deposit funds into their accounts via Absa or Standard Bank branches.
Banks such as Absa and Standard Bank have clear strategies of growth and expansion beyond South Africa to sub-Saharan Africa, and Islamic banking and insurance are an attractive component of this offering especially in countries with large and affluent Muslim populations.
At the same time banks offering Islamic financial products in the “rainbow republic” are encouraged by the increasingly proactive policy of the South African government of President Jacob Zuma, toward the facilitation of Islamic finance in the country under financial inclusion policy and other reasons.
The South African National Treasury has introduced tax neutrality measures for Mudaraba, Murabaha and Diminishing Musharaka products and emphasized that "the development of Islamic finance in South Africa is critical to the expansion of National Treasury's strategy to position South Africa as a gateway into Africa. The Treasury envisages South Africa being a central hub for Islamic product development and ensuring the rollout of such products into African markets."
South African Finance Minister Pravin Gordhan, introducing the Taxation Laws Amendment Bills 2010 in the National Assembly in Cape Town in August 2010, gave further insight into the government's rationale for the tax changes relating to the Islamic financial products.
"South Africa is an ideal location for multi-nationals to base their regional operation for investments into sub-Saharan Africa. South Africa offers world-class financial services, strong and clear financial regulatory architecture and world-class infrastructure ... Certain domestic tax anomalies, the exchange control regime and fierce competition from certain low tax countries, remain stumbling blocks to South Africa taking full advantage of the opportunities that are available. An important area of innovation relates to the growing use of Islamic financing, which contains certain prohibitions in respect of finance, including prohibitions against interest, immoral substances and the lack of transparency in respect of investments. At issue is the tax system's lack of recognition of Islamic finance, as it mainly focuses on traditional forms of finance. The proposed amendments will level the playing field in respect of certain Islamic financial products when undertaking savings and investments and when attempting to bank finance," explained Gordhan.
Standard Bank and Absa are spearheading this Islamic finance foray into the African continent. In July the Central Bank of Nigeria, for instance, gave approval to Stanbic IBTC Bank, the Nigerian subsidiary of Standard Bank, a license to set up an interest-free Islamic banking subsidiary subject to complying with the approval terms within six months. In Tanzania, Standard Bank has also launched a number of Islamic consumer finance products including Islamic mortgages, leasing, business account facilities and Takaful.
Absa at the same time has an established and dedicated Absa Islamic banking brand and window. With the acquisition of Takafol SA, which is awaiting final approval from the banking and insurance regulator, Absa is keen to build an additional brand, Absa Takaful.
In fact, Takafol SA has a history with the Absa Group through its underwriting relationship with Absa Insurance Company Limited (AIC). In 2008, Takafol SA appointed AIC their underwriting partner and this relationship, according to both parties, contributed to Takafol SA's further development, with personal lines and commercial business growing by more than 66 percent over the next two years.
Takafol SA offered short-term Takaful for business, vehicle, personal and household cover. The merger of Takafol SA into AIC will bring many economies of scale including direct control over underwriting and pricing, and greater clarity and certainty in terms of global standards of Shariah governance.
Absa Takaful will be headed by Uwaiz Jassat, Takafol SA's CEO, who will report to Edwyn O'Neill, managing director of Absa Insurance Company. At the announcement of the acquisition, O,Neill emphasized that "this deal demonstrates Absa's commitment to provide the Islamic community with a holistic financial services offering that is Shariah-compliant. Today, we cement our relationship with the Islamic community and recognize that there is a need for similar products in the rest of Africa."
Takaful provision in South Africa is so underdeveloped and incestuous that other banks such as Albaraka SA offers Takaful services to it clients through its association with Takafol SA. Albaraka Bank SA has close relations with Absa, which also manages its Islamic equity fund offerings.
However, this may also be a cue for Takaful providers from abroad to think about using South Africa as a gateway to spearhead Takaful business into new markets in Sub-Saharan Africa.
Source : http://arabnews.com/economy/islamicfinance/article503525.ece
Etiqa Takaful Launches Four New Insurance Products
KUALA LUMPUR, Sept 30 (Bernama) -- Etiqa Takaful Bhd's newly-launched products -- Harmoni, Intelek, Prisma and Prisma+ -- aim to provide comprehensive protection and savings benefit for all stages of life.
In a statement, Etiqa Insurance and Takaful chief executive officer, Hans de Cuyper, said the products were created for those who wanted to make their life easier knowing they had good and comprehensive protection and savings benefits throughout their lives.
"This is very much in line with the Etiqa brand platform of humanising insurance and takaful, where we continue to make insurance and takaful simpler for everyone," he said.
de Cuyper, who is also the company's executive director, said these products were not only simple to understand but were simple to be obtained.
Harmoni helps provide protection and savings from just RM70 contribution a month. It allows the policyholders to withdraw some of the money from the Participant Investment Fund should they require it for things that matter.
Prisma secures the family's financial future by providing substantial cover from just RM50 contribution a month.
Prisma+ protects against life's uncertainties by offering a sizeable financial cover as well as the advantage of accruing cash from just RM50 contribution a month.
Intelek builds a sizeable fund for children's education needs as well as providing protection from just RM70 a month. It rewards children financially on their achievements in major examinations.
-- BERNAMA
Source : http://www.bernama.com.my/bernama/v5/newsbusiness.php?id=616953
KUALA LUMPUR, Sept 30 (Bernama) -- Etiqa Takaful Bhd's newly-launched products -- Harmoni, Intelek, Prisma and Prisma+ -- aim to provide comprehensive protection and savings benefit for all stages of life.
In a statement, Etiqa Insurance and Takaful chief executive officer, Hans de Cuyper, said the products were created for those who wanted to make their life easier knowing they had good and comprehensive protection and savings benefits throughout their lives.
"This is very much in line with the Etiqa brand platform of humanising insurance and takaful, where we continue to make insurance and takaful simpler for everyone," he said.
de Cuyper, who is also the company's executive director, said these products were not only simple to understand but were simple to be obtained.
Harmoni helps provide protection and savings from just RM70 contribution a month. It allows the policyholders to withdraw some of the money from the Participant Investment Fund should they require it for things that matter.
Prisma secures the family's financial future by providing substantial cover from just RM50 contribution a month.
Prisma+ protects against life's uncertainties by offering a sizeable financial cover as well as the advantage of accruing cash from just RM50 contribution a month.
Intelek builds a sizeable fund for children's education needs as well as providing protection from just RM70 a month. It rewards children financially on their achievements in major examinations.
-- BERNAMA
Source : http://www.bernama.com.my/bernama/v5/newsbusiness.php?id=616953
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