IslamicFinance.de

The Kenya Reinsurance Corporation is planning to venture in sharia-compliant business and confirmed that it will start ReTakaful insurance in the country and the areas where it already has a presence in West Africa and the Middle East markets. According to the firm’s managing director, Mr Jadiah Mwarania, the development is part of Kenya Re’s 2013-2017 core strategic areas that touche on market expansion and development of products. The firm elected a sharia-based supervisory board last year to advise the firm on acceptable aspects of the ReTakaful.

Siti Aminah Hj Abd Rahman, senior officer in Wealth Management at Baiduri Bank, spoke during a financial planning forum at the Ministry of Finance. She said a person's expenditure and lifestyle should be based on his or her income and explained the four concepts of financial planning. She also urged participants to consider insurance to protect themselves and loved ones, and added that those who are looking into investing should make sure to study the investment. Takaful Brunei Keluarga Senior Executive Officer Noor Amal Fitriyah Abd Rahim, emphasized the importance of insurance during her speech and recommended to being prepared to settle and manage debts as part of financial planning.

The Takaful industry is growing but also facing certain challenges which include issues regarding re-Takaful, regulatory challenges, competition and lack of human capital. In order to overcome all these challenges and issues, Al Huda CIBE established a Takaful Consultancy Wing with consultant Captain Jamil Akhtar Khan. Khan has expertise on Takaful regulatory issues, establishment of Takaful companies and other related departments. Takaful Consultancy Wing will be an independent institution which will provide its services to other organizations for the establishment of new Takaful companies, research, advisory, training, re-Takaful, Shariah guidance and other Takaful related matters.

Leaders within the takaful insurance industry have predicted continued high rates of growth within the sector ranging between 15% to 20% over the next several years. This has enabled the sector to secure high profits as demand increases for financial services in Egypt’s banking industry. However, takaful insurance companies also suffer from many of the same problems plaguing commercial insurance companies, such as an overall decrease in the amount of salaries and wages, in addition to other factors associated with the general slowdown of Egypt’s economy. Since 2003, five takaful property insurance companies and three takaful life insurance companies have been established. These companies combined have come to represent nearly 30% of the Egyptian insurance market.

The Islamic Corporation for the Insurance of Investment and Export Credit has entered into an agreement with Nigerian Export-Import Bank for promoting Nigeria's exports. The ICIEC will provide credit insurance and reinsurance support to NEXIM. NEXIM insurance underwriters would be provided training after which joint promotion would be undertaken in the Nigerian market, Dr. Abdel Rahman Taha, ICIEC's chief executive officer said.

According to the rating agency A.M. Best, inconsistent regulation across the Gulf's takaful industry affects profit margins and credit ratings, while providing an arbitrage opportunity. The lack of coordination among regulators causes difficulties for takaful operators, increasing therefore their funding costs by as much as 1 percentage point. Some companies take advantage of the variation in rules - booking business in one country while selling policies elsewhere. Jurisdictions with specific takaful rules include the United Arab Emirates, Bahrain, the Dubai International Financial Centre and the Qatar Financial Centre. Some others, such as Kuwait, do not have specific regulations.

The Takaful market has been growing steadily and remains unsaturated with huge growth potential. Global Takaful contributions grew by 19 per cent in 2010 to US$8.3 billion and were forecast to reach US$12 billion in 2012.

In order to to improve the operational model of the entire takaful industry, the Central Bank of Bahrain is set to issue new enhanced draft rules. Thus, it will also be able to make the country a preferred choice for all takaful and retakaful. The new rules are part of solvency (Phase II), and are related to corporate governance and actuarial reporting requirements. With the introduction of these rules in 2013, the central bank aims to accelerate growth of the country’s takaful industry while protecting the interest of all industry participants.

Insurance for life and even buildings has remained under-exploited in the Middle East. The problematic of the business is the socio-cultural barrier, on top of the weak demands, by international standards, and low market penetration.

According to a new report from A.M. Best Co. the development of Takaful regulation varies significantly between the countries of the GCC. As a result, the levels of policyholder protection differ from one state to another, which has created opportunities for Takaful operators to pursue regulatory arbitrage. A.M. Best believes the solution is a more consistent application of regulation, and therefore provide sufficient policyholder protection.

Several Japanese institutions are establishing and expanding their Islamic finance businesses. Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking for example made a Shariah-compliant deal with Brunei Gas Carriers (BGC). Other financial institutions and insurance companies focus on Malaysia to offer their Islamic products.

Al Rajhi Takaful posted a net profit of SAR 1,477 thousand for the last quarter of 2012. Compared to that, the net profit for the corresponding period in 2011 was SAR 5,125 thousand, which marks a decrease of 71.2%. The net profit before Zakat is SAR 2,118 thousand for Q4 2012, contrasting with profit before Zakat of SAR 5,125 thousand for the same period in 2011, thus reaching a decrease of 58.7%. There is a 55.2% difference in net profit after Zakat betwen Q3 and Q4 in favour of the former. In Q4 it was SAR 3,294 thousand.

According to a statement by CIMB Group Holdings Bhd, the sale of its 49% stakes worth RM1.11 billion in CIMB Aviva Assurance Bhd and CIMB Aviva Takaful Bhd to Khazanah Nasional Bhd has been completed. The life insurance and takaful companies stake sales are satisfied by RM1.06 billion in cash combined with RM43.5 million worth of shares in a new insurance holding company called Renggis Ventures Sdn Bhd. The latter s wholly-owned by Khazanah. To sum up, CIMB will maintain an effective 2% interest in CIMB Aviva Assurance and CIMB Aviva Takaful respectively.

Takaful Ikhlas Sdn Bhd has appointed a new chief executive officer of the general and family takaful company - Ab Latiff Abu Bakar. The appointment became effective on January 7th 2013. Latiff has a Bachelor Degree in Business Administration from the University of Portland, USA. He has furthermore over 20 years of experience in the field including senior management positions in insurance and takaful companies. Before joining Takaful Ikhlas, he was head of takaful in an international insurance company.

Indonesia is developing into a significant takaful industry, demonstrating higher growth rates in gross written premiums generated than some of the GCC countries. Key factors for the dynamic growth of the industry are the relatively low penetration rates in combination with strong macroeconomic fundamentals, favorable demographics and an improved regulatory framework. Moreover, both domestic and international takaful insurance companies increase in number, thus supporting the overall growth of the industry.

Dear Reader,

Islamic finance had another great year. Many of its market segments progressed, like for example the Sukuk market gaining more maturity. Despite the ongoing debt crisis a good sign of hope and happiness.

Nevertheless we are - as an industry - still not satisfied with the achievements. Islamic finance shall grow stronger in terms of social impact and in terms of substance:

Hence, please allow me to re-iterate my call for participating in international initiatives beyond just our own industry to learn and spread knowledge and experience:

Calling Islamic financial institutions to become member of the United Nations Finance Initiative
http://www.islamicfinance.de/?q=node/811

Inshallah we see more Islamic financial institutions taking a lead in SRI, Social Impact Investing and other approaches while contributing with Islamic finance knowdledge to the conventional industry. The time is now; and there are signs that Malaysia aims for a lead:
http://www.islamicfinance.de/?q=node/4151

Indonesia is on the course to become the major player in takaful industry. Growth rate as well as premiums for takaful operations has been increasingly growing in the last years and as result thereof, Indonesia could overtake several GCC countries. During the 2007-2010 period, the growth of Indonesian takaful industry was being supported from both domestic and international insurance companies. The Industry outlook for the period 2012-2016 remains in all aspects positive.

Three new takaful licences has been launched and are waiting for completing of all the requirements, according to Oman's Capital Market Authority.

Kuwaiti T'azur Takaful Insurance Company has been assigned a first-time Ba1 insurance financial strength rating (IFSR) with a stable rating outlook by Moody's Investors Service. The rating is a reflection of the company's good market position within the domestic Takaful market. Its market share is about 8% which puts the company on the 5th position in terms of Takaful contributions. In the last two years T'azur has been growing rapidly - with growth rates of 44% in average.

Weqaya Takaful Insurance & Reinsurance was assigned a BBB credit rating with a stable outlook by Standard & Poor's. Thus, its rating has been reaffirmed. The rating is based on continuous regular surveillance of the company's performance for the second year in a row by the rating agency. It is a reflection of Weqaya's competitive position and strong capitalisation.