Further takaful sector consolidation expected

Zafri: 'We do aspire to go overseas'.

Zafri: 'We do aspire to go overseas'.

KUALA LUMPUR: The takaful segment may see further consolidation due to the Islamic Financial Services Act (IFSA) that requires composite takaful providers to segregate their family and general units under separate licences, says Great Eastern Takaful Bhd chief executive officer Zafri Abdul Halim.

He said companies affected by the requirement would have to inject more capital to spin off their units.

Speaking at a press conference, he said players would have to increase their capital base to fulfil this requirement if they chose to retain both the family and general takaful businesses.

He explained that some takaful companies were big as a whole entity but one of the units could be small.

Unless they intended to inject capital to grow the smaller unit, the expertise and products, divesting the business to another party could be an option, he added.

He also pointed out that the big boys with more resources would be able to give higher commissions to their agents and attract more talents.

He opined that such a consolidation was good as it would benefit the participants and customers.

Asked if the company would consider acquiring its peer, he said it depended on the market conditions and noted that it would be more keen to buy a foreign takaful company when it wanted to grow its regional presence.

“We do aspire to go overseas, particularly to South-East Asian countries like Brunei, Indonesia and Thailand, but it is still at a preliminary stage,” he said, adding that it was studying the fast-growing takaful industry in Indonesia, which, for instance, was backed by the archipelago’s vast population.

One of the recent mergers and acquisitions in the sector was the purchase of ING Group’s Malaysian units by AIA Group Ltd for RM5.3bil last year, which also included the latter’s 60% stake in ING Public Takaful Ehsan Bhd, now known as AIA Public Takaful Bhd.

AIA owns another takaful unit called AIA AFG Takaful Bhd.

The other players are AmFamily Takaful Bhd, EtiqaTakaful Bhd, HSBC Amanah Takaful (M) Sdn Bhd, Hong Leong MSIG Takaful Bhd, MAA Takaful Bhd, Prudential BSN Takaful Bhd, Sun Life Malaysia Takaful Bhd, Syarikat Takaful Malaysia Bhd and Takaful Ikhlas Sdn Bhd.

Bank Negara statistics showed that total net contributions income from the industry grew 21.2% to RM5.89bil in 2012 from RM4.86bil in the preceding year.

Zafri said the company was eyeing to move from the fourth position this year to third in terms of new business total weighted contribution next year.

He said ranking was an improvement from the eighth spot last year, and anticipated the firm to turn to profitability by year-end underpinned by its November figures and the seasonally strong final quarter.

Takaful , Great Eastern Takaful Bhd