IslamicFinance.de

Indonesia’s Islamic insurance industry is expanding three times as fast as Malaysia’s, prompting American International Group Inc. and Sun Life Financial Inc. to seek a broader presence in the nation. AIG is considering offering retakaful in Indonesia in two years. The initiative would complement an Islamic insurance business it started in the Southeast Asian nation in 2010. Meanwhile, PT Sun Life Financial Indonesia will add to its 35 outlets in the country, while Reinsurer PT Reasuransi Internasional Indonesia plans to make all its branches fully Shariah-compliant. As Islamic insurance becomes more prominent, that should increase demand for Shariah-compliant bonds as insurers try to match liabilities with their investments.

American International Group Inc. is plotting its entry into Malaysia’s Islamic insurance market, lured by the country’s economic expansion and an industry that has grown more than fivefold in less than a decade. The insurer will start a Shariah-compliant reinsurance business by June and may eventually offer a fuller range of services, Antony Lee, chief executive officer at AIG’s Malaysian unit, said. In line with the continuing expansion of the takaful business, the demand for retakaful is expected to expand between 15 percent and 20 percent on an annual basis. However, a key challenge for retakaful companies is their limited ability to compete with their larger non-Islamic counterparts for business that requires a bigger balance sheet.