Takaful wants to focus on negotiations with Abu Dhabi-Kuwait-Malaysia

Malaysia Star: Syarikat Takaful Malaysia Bhd (STMB) ceased talks with Islamic Arab Insurance Co P.J.S.C. (Salama) because it wanted to focus on negotiations with Abu Dhabi-Kuwait-Malaysia Strategic Investment Corp.

“We felt Abu Dhabi-Kuwait-Malaysia was a better fit than Salama. It doesn’t mean anything material but for now, we have decided to focus on discussion with Abu Dhabi-Kuwait-Malaysia,” said STMB group managing director Datuk Hassan Kamil after the company AGM yesterday.

On Tuesday, STMB announced that discussions with Salama had been terminated.

Hassan said negotiations with the two were initiated last year as STMB was seeking a strategic partner to raise capital to meet Bank Negara’s risk-based capital requirement.

While the requirement was due in January for conventional banks, takaful operators were likely to be given until 2010 to meet that specification, he added.

STMB is confident of sustaining growth as the takaful markets in Malaysia and Indonesia are still in their infancy stage.

Takaful business comprised only 8% to 9% of the total insurance industry in Malaysia in terms of asset size. STMB, meanwhile, owns about 40% of the takaful market in the country.

Hassan said future growth would be spurred by underwriting instead of investments. It expects the four new products launched last week to generate RM15mil worth of new income premium.

This would boost market share to 50% for the year ending June 30, 2009, he said, adding that if the crisis continued, it would be difficult to achieve its FY09 targets.

STMB recently gained Bank Negara approval to inject RM21mil into its Indonesian operations to expand its presence in the republic.

“Our Indonesian operations have 34 branches and that is not enough for a meaningful presence since Indonesia is a big country,” he said.

It also planned to find a strategic partner in Indonesia, preferably one with bancassurance, as it’s the most effective way for expansion, he said.

STMB was also given approval by Bank Negara to open counters at Bank Islam and Tabung Haji outlets, and this would likely strengthen its business further, Hassan said.

For the first quarter ended Sept 30, it made a net profit of RM1.5mil on revenue of RM238mil.