MAA focusing on Islamic insurance as demand rises

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Tunku Dato’ Ya’acob Bin Tunku T’an Sri Abdullah, Executive Chairman of MAA Group Berhad

MAA Group Berhad (MAA) offers a full range of Shariah compliant life and general insurance products via its subsidiary, MAA Takaful Berhad, a joint venture company with Solidarity Company BSC of Bahrain, together with Unit Trust Management services via its subsidiary MAAKL Mutual Berhad. MAA Group today ranks among the highest-profile non-bank financial institutions in Malaysia. Inside Investor talked to Tunku Dato’ Ya’acob Bin Tunku T’an Sri Abdullah, Executive Chairman of MAA Group Berhad, about the prospects of the business.

MAA Group is a risk (insurance and takaful) and asset management (unit trust) company that strives to be Number One in Malaysia. Together with its conventional insurance operation, with a gross written premium of $476 million as per the latest available figures for 2010, the group distributes takaful, life, and general insurances through 8,000 agents across Malaysia.

On October 1, 2011, MAA Group sold its conventional insurance division to Zurich Financial Services Group of Switzerland.

“The Malaysian Central Bank had recently set a very high capital requirement for insurance companies, beyond that set by other regulators in the world. As a public listed business entity, responsible to the investing public, we could not justify tying up so much capital in such an unproductive way, and so with a very heavy heart we made the decision to exit the conventional insurance sector in Malaysia. It is sad to see Malaysian’s last home grown non-bank insurance company go, but it was a necessary decision, in line with the country’s policy of global integration,” Tunku Ya’acob said.

“MAA Takaful is however another story. It is the fastest growing sector of the risk management industry, and one that holds great promise for shareholders and customers alike. I see the opportunity for MAA to grow in this area, and am excited about our prospects for the future. Tying up capital in this area of risk management is justifiable”, he added.

MAA’s strength has always been in distribution, and in particular, in the towns and cities outside Kuala Lumpur. Competition has always been stiff in Kuala Lumpur, and so MAA’s strategy was to focus its efforts on smaller towns across the country.

“All of the big international insurers have been in Kuala Lumpur since Malaysia’s independence in 1957, and we realised it was going to be hard to compete with these well established brands, on a head-on challenge,” he said.

MAA discovered that demand for its policies was high in the smaller towns, as not that many insurers had penetrated what was perceived as low-value territories, which have not reached the saturation point like in Kuala Lumpur.

“Maybe ING was there, maybe AlA, but there would only be about two, maybe three companies in the small towns, while in KL, we had 17 companies to compete with,” he added.

Being a member of the Malaysian Royal family, Tunku Ya’acob has close ties to the Gulf Cooperation Council (GCC). In 2006, the group established its first partnership with a GCC insurer, Solidarity Company BSC of Bahrain, to set up MAA Takaful. The Malaysian Central Bank approved the takaful license on March 3, 2006, and, two months later, MAA Takaful was incorporated with a paid-up capital of RM100 million. MAA Group holds 75 per cent equity interest in MAA Takaful while Solidarity holds 25 per cent.

MAA Takaful’s products ranges from family takaful, covering sectors such as health care, mortgage protection, education, life, as well as group insurance to general takaful for property, accident, motor, marine, and other risks. The company has a five-member Shariah committee and describes its vision as “to be the leading takaful provider for all Malaysians, differentiated by being innovative, guaranteeing superior customer experience and earning the trust of all our stakeholders.”

Malaysia’s insurance industry grew about 12 per cent in 2011 on the back of a healthy environment fuelled by various government-led stimulus plans, along with low interest rates. However, growth forecasts come with a warning on the economic instability affecting the US and Europe that may inevitably have an impact on Asian countries with global insurance performance likely to experience a drop.

Regarding Islamic insurance, with eight players licensed to sell takaful products in Malaysia, the sector grew by about ten per cent in 2011, as many of the country’s majority Muslim population opts for Shariah-compliant insurance investments.

Tunku Ya’acob ended by saying, “MAA Takaful is the only company to turn a profit from its second year of operations, and in its short five-year history won many industry awards for innovation and sales. I see no reason why we cannot make MAA Takaful as big and as successful as our conventional insurance division. We will definitely make MAA Takaful progress with strength, to help brand Malaysia as an Islamic financial hub that all Malaysians can be proud of”.

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Reading Time: 3 minutes

Tunku Dato’ Ya’acob Bin Tunku T’an Sri Abdullah, Executive Chairman of MAA Group Berhad

MAA Group Berhad (MAA) offers a full range of Shariah compliant life and general insurance products via its subsidiary, MAA Takaful Berhad, a joint venture company with Solidarity Company BSC of Bahrain, together with Unit Trust Management services via its subsidiary MAAKL Mutual Berhad. MAA Group today ranks among the highest-profile non-bank financial institutions in Malaysia. Inside Investor talked to Tunku Dato’ Ya’acob Bin Tunku T’an Sri Abdullah, Executive Chairman of MAA Group Berhad, about the prospects of the business.

Reading Time: 3 minutes

Tunku Dato’ Ya’acob Bin Tunku T’an Sri Abdullah, Executive Chairman of MAA Group Berhad

MAA Group Berhad (MAA) offers a full range of Shariah compliant life and general insurance products via its subsidiary, MAA Takaful Berhad, a joint venture company with Solidarity Company BSC of Bahrain, together with Unit Trust Management services via its subsidiary MAAKL Mutual Berhad. MAA Group today ranks among the highest-profile non-bank financial institutions in Malaysia. Inside Investor talked to Tunku Dato’ Ya’acob Bin Tunku T’an Sri Abdullah, Executive Chairman of MAA Group Berhad, about the prospects of the business.

MAA Group is a risk (insurance and takaful) and asset management (unit trust) company that strives to be Number One in Malaysia. Together with its conventional insurance operation, with a gross written premium of $476 million as per the latest available figures for 2010, the group distributes takaful, life, and general insurances through 8,000 agents across Malaysia.

On October 1, 2011, MAA Group sold its conventional insurance division to Zurich Financial Services Group of Switzerland.

“The Malaysian Central Bank had recently set a very high capital requirement for insurance companies, beyond that set by other regulators in the world. As a public listed business entity, responsible to the investing public, we could not justify tying up so much capital in such an unproductive way, and so with a very heavy heart we made the decision to exit the conventional insurance sector in Malaysia. It is sad to see Malaysian’s last home grown non-bank insurance company go, but it was a necessary decision, in line with the country’s policy of global integration,” Tunku Ya’acob said.

“MAA Takaful is however another story. It is the fastest growing sector of the risk management industry, and one that holds great promise for shareholders and customers alike. I see the opportunity for MAA to grow in this area, and am excited about our prospects for the future. Tying up capital in this area of risk management is justifiable”, he added.

MAA’s strength has always been in distribution, and in particular, in the towns and cities outside Kuala Lumpur. Competition has always been stiff in Kuala Lumpur, and so MAA’s strategy was to focus its efforts on smaller towns across the country.

“All of the big international insurers have been in Kuala Lumpur since Malaysia’s independence in 1957, and we realised it was going to be hard to compete with these well established brands, on a head-on challenge,” he said.

MAA discovered that demand for its policies was high in the smaller towns, as not that many insurers had penetrated what was perceived as low-value territories, which have not reached the saturation point like in Kuala Lumpur.

“Maybe ING was there, maybe AlA, but there would only be about two, maybe three companies in the small towns, while in KL, we had 17 companies to compete with,” he added.

Being a member of the Malaysian Royal family, Tunku Ya’acob has close ties to the Gulf Cooperation Council (GCC). In 2006, the group established its first partnership with a GCC insurer, Solidarity Company BSC of Bahrain, to set up MAA Takaful. The Malaysian Central Bank approved the takaful license on March 3, 2006, and, two months later, MAA Takaful was incorporated with a paid-up capital of RM100 million. MAA Group holds 75 per cent equity interest in MAA Takaful while Solidarity holds 25 per cent.

MAA Takaful’s products ranges from family takaful, covering sectors such as health care, mortgage protection, education, life, as well as group insurance to general takaful for property, accident, motor, marine, and other risks. The company has a five-member Shariah committee and describes its vision as “to be the leading takaful provider for all Malaysians, differentiated by being innovative, guaranteeing superior customer experience and earning the trust of all our stakeholders.”

Malaysia’s insurance industry grew about 12 per cent in 2011 on the back of a healthy environment fuelled by various government-led stimulus plans, along with low interest rates. However, growth forecasts come with a warning on the economic instability affecting the US and Europe that may inevitably have an impact on Asian countries with global insurance performance likely to experience a drop.

Regarding Islamic insurance, with eight players licensed to sell takaful products in Malaysia, the sector grew by about ten per cent in 2011, as many of the country’s majority Muslim population opts for Shariah-compliant insurance investments.

Tunku Ya’acob ended by saying, “MAA Takaful is the only company to turn a profit from its second year of operations, and in its short five-year history won many industry awards for innovation and sales. I see no reason why we cannot make MAA Takaful as big and as successful as our conventional insurance division. We will definitely make MAA Takaful progress with strength, to help brand Malaysia as an Islamic financial hub that all Malaysians can be proud of”.

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