Following the departure of Mohamad Salihuddin Ahmad as CEO of Malaysia’s Great Eastern Takaful (GE Takaful) on the 21st September 2012, the Takaful operator remains determined to maintain the course steered by its former head, who helped set up the firm in 2010.
In an interview with Islamic Finance
news (the first to report that Mohamad Salihuddin’s resignation was rumored to be due to a disagreement with the Great Eastern Group (GE) on GE Takaful’s reporting structure) Zafri Ab Halim, GE Takaful’s acting CEO and its chief financial officer (CFO), sought to clarify that the firm’s operations remain firmly intact, with a target to achieve profitability in 2015.
The firm also remains open to expanding its footprint to Indonesia; while strengthening its presence in its Malaysian home base by improving the efficiency of its agency force and entering into more bancaTakaful agreements to increase the distribution of its products.
Same ship, different captain
Despite market talk, GE Takaful’s official stance is that Mohamad Salihuddin’s exit was due to personal reasons, although Zafri confirmed the structural changes that now require the CEO of GE Takaful to report to Koh Yaw Hui, CEO and a director of Great Eastern Life Assurance (Malaysia), the local conventional Life insurance arm of the GE group, which is owned by Singapore’s Great Eastern Holdings.
Zafri stressed that in spite of the new reporting structure, GE Takaful’s operations remain independent from those of its conventional counterpart, with the Takaful arm possessing a separate board of directors and its own Shariah board. He also refuted speculation that the GE group has shown flagging support for its Malaysian Takaful arm, noting that GE Takaful’s shareholders provide “full support” to the firm.
Additionally, he clarified reports that GE Takaful’s agents had demonstrated in front of its offices in Kuala Lumpur in solidarity with Mohamad Salihuddin’s resignation, noting that the protests were in relation to matters on GE’s conventional side and only involved its conventional insurance agents.
Meanwhile, Zafri also reiterated that GE Takaful’s business remains intact despite the departure of Mohamad Salihuddin, noting that his charge is now to continue with the objectives set out by the firm’s previous head. “It’s still the same ship, just with a different captain,” he said, disclosing that the firm is expected to officially name him as CEO after its next board meeting in November this year, following which his appointment will be submitted to the Malaysian central bank for its approval.
Zafri joined GE Takaful in April last year, after returning to Malaysia from an almost seven-year stint as the CFO at AlJazira Takaful in Saudi Arabia.
Strengthening Malaysian business
Continuing from the efforts of its previous CEO, Zafri said that the firm remains focused on strengthening its presence in Malaysia, where it is currently ranked eighth in terms of market share. “We have a lot more potential to develop and are working closely with our distributors to get more business,” he noted, explaining that one challenge for the firm is that unlike many of its competitors, it does not have a direct link to banks; thus closing off certain bancaTakaful arrangements. The firm is however currently working on setting up bancaTakaful partnerships with MBSB (Malaysia Building Society), Al Rajhi Bank Malaysia and Kuwait Finance House to increase distribution of its products; while the Takaful operator also hopes to expand its product range.
Its core business nonetheless continues to come from its agency force, of which 4,000 market conventional and Takaful products, with another 280 agents selling only Takaful. Zafri said that the firm is planning to increase its agency force of solely Takaful agents to 600 next year, while terminating those who are unproductive and incentivizing others to ensure productivity.
The firm’s measures are ultimately targeted at achieving profitability in 2015. As at the 30th June 2012, the Takaful operator had already brought its losses down to RM1.71 million (US$559,273), from a net loss of RM3.84 million (US$1.26 million) a year earlier.
Overseas expansion plans
Zafri also said that GE Takaful still plans to enter the Indonesian market, marking the firm’s expansion abroad in a move that would leverage the Takaful window of Great Eastern Life Indonesia. Its plans however have been put on the back-burner, despite GE Takaful already having prepared its products for the Indonesian market.
The delay is attributed to new rules requiring Indonesia’s conventional insurers with Takaful windows to spin off the Shariah compliant operations into fully-fledged entities; the deadline of which remains uncertain.
Until then, the firm will focus on fortifying its base at home. With new leadership in place GE Takaful will have to center all its efforts on ensuring a smooth transition following the departure of its top figurehead. — EB