BAHRAIN: A subsidiary of Allianz Group, Allianz Takaful, is in talks with a regional Islamic institution, urging it to issue a Sukuk exclusively for the industry as it struggles to find long-term issues in the market.

Allianz Takaful CEO Rahman Tolefat said asset allocation for the Takaful firms have also proved to be a stumbling block for the Takaful industry as it needs more “high quality” corporate issues.

“The credit rating of corporates which issue Sukuk is just not there. I prefer an issue which has an ‘A’ rating and above. Even if they provide low yields, we don’t mind,” he said. Tolefat said Takaful firms also cannot buy into sovereign Sukuk issues since a large chunk of the issues are absorbed by banks. Central banks and regulatory authorities should ideally allocate 10% to 15% of such issues to Takaful companies, he added.

Solid growth awaits Takaful

MALAYSIA: The country’s Takaful industry is set to record positive growth this year, given the expansion of the industry globally which has seen an annual growth rate of 25% in past years, said Malaysia Takaful Association chairman Syed Moheeb Syed Kamarulzaman. The growth in Takaful, according to him, will be further enhanced based on the stronger economic performance projected for Malaysia this year.

Going by the book

INDONESIA: Capital market regulator Bapepam expects most of the Takaful units and firms in the country to meet the new minimum capital requirement by the end of this year, except for two Takaful units.

The head of its insurance department, Isa Rachmatarwata, did not identify the two or say they would not be able to comply with the new capital rule. Under the regulation for minimum capital requirement which was issued last year, the Shariah unit of a conventional insurance business must have a minimum capital of IDR25 billion (US$2.7 million) by the end of 2010, while full-fledged Takaful businesses are required to raise their capital to IDR50 billion (US$5.4 million).

The intent, according to Bapepam, is for the Takaful units and firms to strengthen their capital base.

Guidelines for bancassurance

PAKISTAN: The Securities and Exchange Commission of Pakistan (SECP) has imposed bancassurance guidelines to supervise the systematic development of the insurance distribution channel.

SECP said the aim is to increase the level of transparency as well as ensure the protection of policyholders.

Under the guidelines, to be fully enforced by the 30th April, banks are not allowed to charge customers additional fees unless specified by the insurers and is a part of the premium.

The guidelines also set maximum commission rates for the banks in both the direct sales model promoted by bank staff and the referral model used by insurers’ sales agents.

Premium to decrease

INDONESIA: Premium growth rate in the country’s Takaful market could ease to 30% this year from 50% to 60% in recent years, said capital market regulator Bapepam’s head of insurance department Isa Rachmatarwata.

He did not give a reason but expected the pace to pick up over the next two years.

New product from Emirates Global Islamic

UAE: Emirates Global Islamic Bank has launched a bancaTakaful product, ‘Sarparast Family Takaful Plan’, in collaboration with Pak-Qatar Family Takaful and FWU Group, a global facilitator of bancaTakaful. Pak-Qatar Family Takaful, the pioneer of Family Takaful in Pakistan, is the fastest growing Takaful company in the country. Incorporated in 2006, it began operations in 2007. The company is registered and supervised by the Securities and Exchange Commission of Pakistan.

Al Hesn Takaful launched

UAE: Emirates Islamic Bank (EIB) and Dubai Islamic Insurance & Reinsurance Company (Aman Insurance) have launched Al Hesn Takaful, a new bancassurance cover which encompasses four different plans — for natural death; death by accident, permanent total or partial disablement due to an accident; death due to an accident in common carriers; and a cash benefit on hospitalization in addition to a lump sum benefit on hospitalization.

The 24-hour worldwide plan is available to all UAE nationals and resident expatriates from 18 years to 64 years of age and requires no medical examinations. The Al Hesn Takaful plan is fully underwritten by Aman Insurance.

Venturing into stocks

INDONESIA: The country’s largest Takaful firm, Asuransi Takaful Keluarga, is looking into investing directly in domestic equities to diversify its portfolio, said president director Agus Edi Sumanto.

He pointed out that while the firm has a small portfolio in stocks through mutual funds, it does not have any direct investment in the stock market.

He felt that such direct investment in the market will enable investors with a high-risk profile to enjoy maximum results. Sumanto expects a decision to be reached in the first quarter of this year on whether the company would invest in equities.

Even if the firm ventures into this, the invested portion in the initial phase would be small, he added.

Outpacing the rest

MALAYSIA: Etiqa Takaful, Malaysia’s largest Islamic insurer, expects its contributions to rise faster than the broader industry’s this fiscal year as interest in Takaful grows and reinsurers provide more capacity.
Etiqa Takaful CEO Shahril Azuar Jimin said Etiqa expects contributions to rise by a fifth this year, versus the industry’s 12%, but slower than last year’s 40%. Shahril attributed the growth to the profit-sharing concept of Takaful.

Also, he said, the shift from conventional insurance to Takaful is due to the better understanding among the public with Takaful now not merely seen as a religious matter but rather a financial tool.

Salama hits a high

UAE: Salama Islamic Arab Insurance Company posted a profit increase of 75% to AED116 million (US$32 million) in its full-year net profit in 2009. Salama’s revenue went up 19% to AED1.58 billion (US$430 million). Net operating profit for 2009 climbed 12% to AED184 million (US$50 million).

Takaful growth drivers

UAE: The Takaful sector in the Gulf Cooperation Council (GCC) will continue to experience steady growth this year, say financial analysts who attribute this to improved regulatory practices and the rising demand for Takaful in the region.

Most of them also believe that governments in the Middle East have done much to promote the growth of Takaful. Standard and Poor’s Ratings Services credit analyst Kevin Willis cited Saudi Arabia as an example; where the government has given the insurance sector a makeover, completely rebuilding it around the Takaful model.

HSBC Middle East head of insurance David Hunt said Saudi Arabia is a good example where regulators have greatly developed the framework in recent years.

Takaful players lead Middle East IPOs

SAUDI ARABIA: Initial public offerings (IPOs) in the Middle East market last year were dominated by the Takaful industry, with the listing of three Takaful operators based in Saudi Arabia in the fourth quarter.

A report based on Ernst & Young data stated that Al Khaleej Insurance & Reinsurance Company had the biggest regional IPO in the insurance sector, raising US$21.3 million in the fourth quarter, while Al Alamiya Cooperative Insurance and Buruj Cooperative Insurance raised US$16 million and US$13.87 million, respectively.

Al Khaleej has Takaful operations in the life insurance sector while Al Alamiya and Buruj have Takaful windows in the non-life sector. All three operators are Saudi Arabia-based.

Al Jasr delayed

QATAR: The founders of Al Jasr Takaful Insurance (Al Jasr) have decided to postpone the firm’s establishment in the country.

Chairman of the founders committee Sheikh Nawaf Mohammed Jabor Al Thani said the decision was due to the persisting uncertainty in the business and investment environment caused by the global financial crisis.
Al Jasr was scheduled to begin operations early this year. No new launch date was given.

UAE: Consolidation seen in Gulf insurance sector

UAE: The untapped potential in the Gulf insurance sector, including Takaful, is expected to be exploited this year with a number of consolidation moves being anticipated.

According to industry analysts, the next 18 months would see more international firms moving into the region and forming joint ventures. “We expect the joint ventures in the insurance industry to double in the next five years, hitting US$15 billion by 2015.

Currently there are 179 insurance companies, including Takaful firms, in the GCC issuing US$10.4 billion of insurance premiums. Saudi Arabia has 29 insurance companies and a population of 28 million. That’s a huge market with an insurance penetration of 0.6%,” reported Clyde & Co partner Peter Hodgins.

Two in one

UAE: Dubai Islamic Bank has launched a Wakalah-based investment plan — Al Islami Muthmir — that offers a built-in family Takaful cover in the case of death.

Al Islami Muthmir is a medium- to long-term plan that offers investors access to a range of Shariah funds targeted at the wealthy. It is available with a minimum contribution of AED100,000 (US$30,000) without any fixed term.