Zurich enters takaful insurance with Malaysia’s MAA buy

Added 28th April 2016

Zurich Insurance is poised to buy Malaysia’ MAA Takaful after receiving regulatory approval.

Zurich confirmed to International Adviser that is has received approval from Bank Negara Malaysia (BNM) and the Malaysia’s finance ministry to acquire 100% of the shares of MAA Takaful - a joint venture launched in 2006 between MAA Group Berhad and Bahrain's Solidarity, which hold 75% and 25% stakes respectively. As of June 2015, MAA Takaful, one of Malaysia’s 11 Islamic insurers, held MYR1.2bn (£208.8m, $306.7m) worth of assets - a 5% increase from a year earlier. Zurich warned that despite regulatory approval there was “no guarantee that the acquisition will be completed” as it still needed the go ahead from MAA’s shareholders.

If successful, the buyout will give Zurich, Europe’s fifth biggest insurer, a foothold in the world’s second largest Islamic insurance market. Takaful Takaful is an Islamic insurance system that complies with sharia law, in which money is pooled by all policyholders and then invested. Under the scheme, takaful firms must follow strict religious guidelines, which ban interest, pure monetary speculation, and prohibits investments in industries such as alcohol and gambling.

Scale back in Asia Meanwhile, the acquisition comes as Zurich looks to scale back its Asian operations, after profits slumped last year when its general insurance division was hit hard by the explosions at the port of Tianjin in China. As part of a review of its business, the Swiss insurer announced in December 2015 that its International Life unit would stop writing new business in Singapore. Middle East expansion A move into takaful could allow Zurich to expand its businesses in the Gulf, which currently consists of offices in Bahrain, Qatar and the United Arab Emirates.

 In December last year, the company said it will effectively exit its general insurance businesses in the Middle East by the end of 2016, but remained firmly committed to its life insurance and corporate reinsurance businesses in the region.

 - See more at: http://www.international-adviser.com/news/1028895/zurich-enters-takaful-insurance-malaysia-maa#sthash.FaiV2HyK.dpuf

Thursday, 3 December 2015 | MYT 11:46 AM Malaysia’s insurers strongly capitalized, says Fitch

KUALA LUMPUR : Malaysia’s insurance and takaful sector is set to remain stable in 2016 as their strong capitalisation will support premium growth and cope with potential underwriting volatility as economic growth decelerates, says Fitch Ratings.
In a new outlook report for the sector next year issued on Thursday, it said the strong capital position for Malaysia’s insurers was built on a robust regulatory framework ahead of the full liberalisation and economic integration with other Southeast Asian economies.
This was evidenced by the industry’s robust consolidated risk based capital ratio of 239% in the first half of this year (1H15), which was well beyond the regulatory minimum of 130%, according to Fitch.
The ratings house believed that stable domestic demand and low insurance penetration would continue to support the general insurance and takaful industries despite a slower premium growth in 1H15 associated with lower automobile sales and lower consumption spending.

“The growth in investment-linked policies is likely to stay strong given the low interest rates, but we expect life insurers to increasingly tap on health-related and retirement products as the population ages and medical costs rise,” it says.
As for the auto industry, Fitch said that the deregulation of tariffs in 2016 will have a mixed impact.
Motor insurers were likely to benefit from greater flexibility in pricing their risks adequately, but it could trigger competitive pricing among fire insurers and erode bottom-line profitability, it explained.

TAGS / KEYWORDS:Business News , Economy , insurance , takaful