Bright outlook for domestic takaful business
Sep 19th, 2009 by Takaful
Source: The Star, 19th September 2009
The outlook for the domestic takaful business remains bright due to the limited number of takaful operators in the country and because almost 60% of the Malaysian population is still uninsured, industry players and analysts said.
Syarikat Takaful Malaysia Bhd (Takaful Malaysia) group managing director Datuk Hassan Kamil said with only eight takaful operators in the country and two more takaful licences to be issued by Bank Negara, there was plenty room for growth for takaful products.
In line with the positive outlook, Takaful Malaysia aims to increase its market share to more than 50% by aggressively growing its retail distribution capabilities.
“Our key growth drivers will mainly come from the general takaful portfolio and retail life market,” Hassan told StarBizWeek.
He added that in order to ensure continuous growth, takaful products needed to be innovative and transparent, together with professional sales and customer service.
Acting on this strategy, Takaful Malaysia has in the pipeline three new takaful products for its financial year ending June 30, 2010, namely Takaful myGraduan (protection and savings plan), Takaful myInvest (protection and investment plan) and Takaful myGemilang (retirement plan).
“High-tech information technology solutions are also necessary to support the dynamic and various distribution channels such as corporate sales, bancatakaful and retail divisions within Takaful Malaysia,” Hassan noted.
He said with many multinationalcorporations vying for the upcoming takaful licences, competition was stiff but it showed that the takaful market domestically and overseas was still quite attractive.
“In any business, further liberalisation will have a positive and negative impact to existing takaful operators. The positive impact from liberalisation will come from the increased innovation in products and technology introduced by new entrants to the industry.
“The negative impact will be that the existing players will have their market share reduced and perhaps some of their staff pinched by the new entrants,” he said.
An analyst with a bank-backed brokerage agreed with Hassan that Malaysia was an attractive destination for the insurance business due to its low penetration rate and expertise in takaful, a segment which many global insurers were keen to dip their fingers into. The analyst also noted that the takaful industry had been enjoying double-digit growth, in revenue as well as takaful fund assets, every year for the past few years, which was another factor to attract investors.
“There (has been) interest shown by foreign parties since the liberalisation announcement, but it could take some time for things to start moving,” the analyst said.
“This has a lot to do with pricing. With the current market conditions and uncertainty still in the air, foreign investors and shareholders are taking a wait-and-see approach.”
Takaful Malaysia’s net profit shot up 170% to RM39.21mil for the fourth quarter ended June 30 compared with RM14.65mil from the previous corresponding period.
But revenue fell 5% to RM365.07mil against RM383.19mil previously.
Earnings per share was higher at 24.08 sen from 9.24 sen previously.
Takaful Malaysia attributed the higher profit to better underwriting results from the general takaful fund and lower operating expenses.
Lower contributions from the family takaful fund as well as lower investment income were cited as reasons for the slight drop in revenue.