It appears to be MNRB Holdings and Prudential BSN Takaful (PruBSN) who are stealing the current Takaful limelight this week.
MNRB Holdings have announced that it is expecting to finalize the sale of a strategic stake of up to 49% in its subsidiary, Takaful Ikhlas, by year-end. The company is also on track to target between 10% to 15% growth in revenue for the current financial year.
According to Ramlan Abdul Rashid, the group chief operating officer, the stake divestment will boost its capital position upon the implementation of the proposed risk based capital (RBC) framework, which he expects to be introduced in the next one and a half years.
The Takaful RBC framework will be used to set future capital requirements through considering the size and degree of risk taken by the Takaful operators. Players within the Malaysian Takaful industry are preparing to strengthen their capital commensurate with operational risks when the future RBC framework comes into effect. This means that the sale of Takaful Ikhlas would have to offer strategic benefits for both companies.
PruBSN, meanwhile, has stepped up its bid to become Malaysia’s largest Takaful operator. PruBSN’s new business sales for the first quarter of 2011 increased by 54% to RM49.2 million (US$16 million).
In the fourth quarter of 2010 it secured 33.5 % of the total annual contribution equivalent (ACE) market share, making it the number one Takaful operator in Malaysia for that quarter.
PruBSN’s regular contribution section also showed an even stronger market share of 42% in the fourth quarter of 2010. For the full year 2010 PruBSN’s market share stood at 23.3%, strengthening the company’s hold as the second largest Takaful provider in Malaysia.
Azim Mithani, chief executive officer of PruBSN, said that: “the company is building on its performance in the first quarter of 2011 to reach its goal of being the number one Takaful operator in Malaysia.”
Spectrum Shift
At the other end of the Takaful spectrum, African insurance operators have passed a joint resolution to begin partnering with mobile phone operators and GSM network providers. This is part of a drive to increase the level of insurance penetration in the continent. The declaration was announced as part of the resolution adopted at the 38th annual conference of the African Insurance Organization, held in Zimbabwe.
“We realize that distribution, premium collection and administration of micro-insurance products will require cost effectiveness and administration efficiencies. To this end, we shall partner with distribution enablers like mobile phone operators to secure high market penetration,” the resolution reads in part.
The participants at the conference also agreed to collaborate with various distribution channels including church organizations, schools, associations and the rural governance system.
The conference noted that the sustained growth and development of the African insurance industry and meaningful contribution to the gross domestic product (GDP) will be greatly enhanced by grasping the tremendous opportunities presented by micro-insurance solutions.
It was stressed that: “A well managed micro-insurance regime would be not only a long-term revenue and profit stream for the industry, but also a mechanism for wealth creation for the currently uninsured and under-banked African market.”
To provide viable micro-insurance solutions, the participants at the conference also resolved to encourage private-public sector partnership with key stakeholders such as the government and regulators, in an effort to secure subsidies and provide an enabling regulatory framework for the initiative.
This was particularly emphasized with regard to Islamic offerings, such as micro-Takaful. One of the greatest hurdles in this space is a general mistrust of the practices of the conventional insurance industry. By taking an unconventional approach to offering such services, it is hoped that this level of mistrust can be negated.