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MAA Group will finally get to proceed with plans to buy new businesses after reaching a settlement agreement with Zurich Insurance Co. Under the settlement, Zurich has agreed to pay MAA Group RM103.43 million on top of the RM344 million acquisition price for MAA Group's interest in MAA Assurance Alliance and its subsidiaries. The RM103.43 million amount is subject to the deduction of the Senai Desaru and Domayne bonds transfer price and Prima Avenue Klang property holdback amount of RM3 million, such that the net amount payable by Zurich into the escrow account is RM78.83 million. However, Zurich will instruct and withhold the RM3 million until delivery of the individual strata titles for Block A of Prima Avenue Klang within three years.

ICIEC the trade takaful arm of the IDB Group published its quarterly newsletter for free download at the link below.

Takaful operators in Malaysia are aggressively strategising their operations to ensure profitable growth and taking advantage of the five-year time frame given to composite takaful players to fully comply with the new Islamic Financial Services Act (IFSA). Under the Financial Services Act (FSA) and IFSA, which came into force on July 1, composite insurers and takaful players would be, among others, required to split their life and general insurance businesses under separate licences. Takaful Malaysia group managing director Datuk Mohamed Hassan Kamil said his company will be devising and evaluating potential options to achieve more efficient solutions from the capital management and shareholder return perspectives. On whether the Act would take a hit on Takaful Malaysia’s bottomline in view of the split in operations of its family (life) and general businesses, Hassan said although there would be potentially higher cost initially due to start-up costs, in the long run.

Syarikat Takaful Malaysia remains in the hunt for a strategic partner in Indonesia to help expand its distribution network there. The takaful operator was in talks to sell a stake or issue new shares in its Indonesian unit to a local partner last year, but the deal fell through. According to Takaful Malaysia Group managing director Mohammad Hassan Kamil, the group has not given up on its search for a strategic partner and is still actively scouting. Takaful Malayisa needs a strategic partner to put in the capital as well as provide the necessary expertise and people to help run the company. The Indonesian operations currently contribute less than 15% of the group's total revenue and less than 5% of its earnings. However, analysts say that the group's operations in Indonesia are poised for explosive growth of high double-digit rates in the next two to four years.

Sources in the Ministry of Finance and Economic Affairs and the Tanzania Insurance Regulatory Authority (TIRA) confirmed that relevant authorities were working on the possibility of introducing Islamic insurance. It is still on preliminary stages but the process is reportedly going on well. Introduction of Takaful will be another milestone in development of the country's financial industry following its liberalisation over 20 years ago, through the Banking and Financial Institutions Act of 1992. The insurance industry is regulated by the Insurance Act, 2009. The latest TIRA market report shows that Tanzania insurance industry grew by 20.0 per cent to 344.7bn/- in 2011, from 287bn/- in 2010.

The Deloitte Islamic Finance Knowledge Center (IFKC) in the Middle East has signed an MOU of a collaborative training initiative with the Islamic Research & Training Institute (IRTI). This collaboration aims to develop industry-based training programs for the industry of Islamic Finance and Takaful in order to streamline professional education and capacity building. Four key objectives are identified to provide 'Continued Professional Development' and Executive Education programs for the Islamic Finance and Takaful industry stakeholders. First, the collaborative approach amongst industry stakeholders will be strengthened. Moreover, high quality practitioner training and support to industry stakeholders will be provided. Another goal is to assist clients, developing talent management strategies and competency-based training approach in Islamic finance practice. The forth aim is to set the standards of professional excellence and good practices of leadership development in Islamic finance.

Malaysia's new Islamic Financial Services Act (IFSA) gives regulators greater oversight as the country seeks to retain its position as the world's second-largest Islamic Banking market. The new rules will boost protection for depositors by making religious advisers legally accountable for financial products, and liable to steep fines and prison time for wrongdoing. The new rules also include a plan to require Islamic life insurers to separate the life arm from other parts of their business. The regulations also could spur takeovers in the Islamic insurance sector through capital-base provisions that encourage larger participants. The IFSA also gives Malaysia's finance ministry more powers to further scrutinise financial holding companies and non-regulated entities if they pose a risk to financial stability.

Takaful Ikhlas allocates close to RM200,000 to carry out its corporate social responsibility (CSR) programmes for the whole month of Ramadan. On July 11, the company contributed RM16,000 to the Al-Ikhlas Home of Elderly Care and Treatment in Puchong, Selangor through its Ramadan programme. Besides this contribution, other daily necessities are also provided including medicine, clothing, food as well as other needs to manage the home.Earlier, 66 residents of the home received free health examinations before attending a special religious class by the company's employees besides a get-together session and iftar dinner. Various activities have been planned during Ramadan such as the exclusive cooperation 'Titipan Kasih Harian Metro' at Olak Lempit, 'Bubur Lambuk' programme, 'Salam Sahur', 'Kasih Syawal', health examination for chronic patients and 'Jom Beli Baju Raya', which will be held nationwide.

Syarikat Takaful Malaysia has put all future investments on hold until it gets a clearer picture on the newly-enforced Islamic Financial Services Act (IFSA). The takaful player had planned to make its first foray into the overseas property market last year and was vying for high yielding properties in London, the UK. However, with news of sweeping regulatory changes expected to be introduced under the IFSA, Takaful Malaysia is temporarily suspending plans. The firm has to study on how to utilise the required financial holding company as a vehicle for us to purchase foreign properties, according to group managing director Datuk Mohamed Hassan Kamil. As such, Takaful Malaysia is holding back its property purchases for now because later when the company is split into two separate units, it would be difficult with the property investment in the mix. Takaful Malaysia will have about RM335 million for property investment overseas.

Islamic capital markets and Shariah-compliant insurance have so far developed separately. However, linking the two markets could cause momentum for both. A big constraint on sukuk market growth has been the product's lack of secondary liquidity. On the other side, the pool of investable money held by insurance companies is a big target for building capacity in the Islamic capital markets. One point of connection between sukuk and takaful markets is that every sukuk deal is backed by commercial assets which are covered by insurance. So far, sukuk issuers can also use conventional insurance for that matter. However, greater use of Islamic insurance would likely make it more efficient und thus, reduce rates.

Takaful insurance has struggled to find traction in the UK. Despite this, this year has seen several Shariah?compliant products launch in the UK. Faithsure and in May, XL Group began providing Shariah-compliant products for large corporates on a global basis. However, the lack of takaful players could be due to the industry’s youth and stiff competition in personal lines of insurance business according to analysts. Sheikh Bilal Khan, sharia scholar at law firm Linklaters, believes there is potential for Takaful products if they are branded and marketed correctly. But the lack of state regulation on sharia-compliant products creates a real lack of trust in the market, he adds. Yet perhaps the demand among Muslim?run SMEs is where the true potential lies. Faithsure's Asif Khan certainly seems to think so. He's confident that Muslim businesses would not only be aware of Takaful insurance but also actively opt for it.

Islamic insurance providers in the UAE are struggling to generate surpluses amid cut-throat competition and overcapacity, Standard & Poor's warned in its report. The takaful industry must compete directly with conventional insurance companies that benefit from established economies of scale, have longer service track records and have more established distribution mechanisms to the marketplace. According to the report, the sector is now overpopulated with insurers. Insurance companies therefore require considerable capital investment to become established. Insurance companies are the most represented on the UAE stock markets, with 23 of the almost 100 publicly listed companies coming from the sector, but they are also some of the least traded stocks.

At least three Islamic insurers are considering disposing their general takaful business ahead of the Islamic Financial Services Act 2013 (IFSA), which comes into force next month. Among companies that are mulling the sale of their general takaful business are HSBC Amanah Takaful (Malaysia) Sdn Bhd, Prudential BSN Takaful Bhd and Hong Leong MSIG Takaful. The IFSA, which has been enacted but pending implementation, requires existing composite licence of insurers to be separated into two capitalised legal entities, namely life insurance or family takaful and general insurance. It has been reported that the minimum capital for each company will be RM100 million. However, most bank-backed takaful companies' are not willing to pump the additional capital to set up a separate general takaful unit since the non-life segment is a small contributor to their overall business.

The global family of takaful market is projected to grow by over 160% in the next five years to hit US$5 billion (RM16.02 billion), World Takaful Conference CEO David McLean said recently. Though the bottom line profitability on the general takaful front is facing stiff competition, at a global level, the growth in family takaful continues to outweigh the growth observed in both general takaful and conventional life insurance. The contributions from Malaysia make up around 56% of the total global family takaful contributions. Recent reports indicate that the Malaysian takaful industry is expected to grow by 20% per annum for the next two years as consumer acceptance grows and regulatory changes provide a stronger and more stable infrastructure for the Shariah-compliant insurance industry.

Asuransi Allianz Life Indonesia plans to double its takaful, market share in five years as it joins insurer Sun Life Financial Indonesia in forming partnerships with banks to tap rising Muslim wealth. Asuransi Allianz made an agreement with HSBC Holdings this year to offer its services. Sun Life will seek to boost business in rural areas via telemarketing campaigns and bank alliances. The takaful market share may climb to 7.9 percent in five years, from 3.9 percent currently. Islamic insurance assets in Indonesia, which has the world’s biggest Muslim population at 216 million, increased an average 53 percent in the last five years to Rp 11.4 trillion ($1.1 billion).

Deloitte released its new Takaful report titled "The global Takaful insurance market: charting the road to mass markets". The report studies the emerging regulatory and practice challenges that will impact the Takaful industry, as well as assesses the business structures and strategies, market developments and growth trends globally. A roundtable was held in Bahrain in June, where Deloitte experts, national regulators, and executive Islamic bankers discussed the report and focussed on the regulatory and industry challenges specifically facing the Middle East Takaful market as well as identifying potential business strategies in the region. Latest industry data estimates that the global Takaful business will reach $20 billion by 2017. Ten key challenges were identified that would significantly impact the future of the Takaful industry.

Al Madina Insurance Company is planning to float an initial public offering (IPO) in the fourth quarter of this year in an attempt to change its status to a Sharia-compliant takaful firm. As per the draft takaful regulation, insurance companies have to be public firms to function as takaful companies. The promoters will reportedly divest 40 per cent of their holding in the company in favour of investing public through the IPO, which will be a premium issue. Al Madina Insurance, which has branch operations in several parts of the country, has a capital base of OMR10 million. Besides, three other companies made similar proposals: Al Maha Ceramics, Sembcorp Salalah Power and Oman Arab Bank. Al Madina has received an 'in principle' approval from the Capital Market Authority for converting its status into an Islamic insurance firm and a final approval will be given only after the company lists its shares on the Muscat Securities Market (MSM).

Fitch Ratings has affirmed HSBC Amanah Takaful (Malaysia) Sdn Bhd's (HSBCAT) Insurer Financial Strength (IFS) rating at 'A-' with Stable Outlook and has simultaneously withdrawn the rating. The rating of HSBCAT is no longer considered by Fitch to be relevant to the agency's coverage. The rating reflects HSBC group's franchise value, distribution channel and management support. HSBC Holdings Plc (AA-/Stable) has a strong ability and willingness to provide it with continuing support. The rating also incorporates HSBCAT's conservative investment mix, healthy capitalisation, and prudent management. The rating is constrained by the takaful operator's modest size, and a limited track record amid a competitive and evolving takaful operating environment. Additionally, the company is challenged to manage its expenses effectively as it builds up its business portfolio.

In Tunisia, the development of Islamic banking and Islamic insurance primarily depends on the introduction of a law that is more in line with market needs and expectations. Still, Mahfoudh Barouni, an expert in banking and finance, believes that the imperfections of the existing law have not so far hindered the smooth development of Islamic finance. In the past, there were already laws governing the sector that had been drafted according to market needs, but this legislation did not actually govern the Islamic finance sector. Currently, there are texts that legislate Islamic finance and grant all Tunisians the freedom to choose between Western and Islamic finance. Speaking on the topic of Islamic insurance, the CEO of Zitouna Takaful, Makram Ben Sassi, recalled that this business has existed in Tunisia for 30 years. Yet, the real problem is that there is a lack of awareness and responsibility rooted in the mentality of Tunisians in general.

With strong support from a government dominated by the Ennahda party, Islamic finance has become an El Dorado of sorts for Tunisia’s financial establishments. And this despite the fact the constituent parliament hasn't yet adopted the least regulation for such operations which were taboo during the days of Zine El Abidine Ben Ali. An affiliate of the state-owned Banque de l'Habitat (BH), Assurances Salim, is poised to break into the market for Islamic insurance and re-insurance. In the works since last year, the operation will lead to the creation of Attakafoulia, a limited liability company with an initial registered capital of €5 million.