Environmental Risk Insurance

ACE Synergy Insurance Bhd recently rolled out an insurance policy to cover environmental risk. The protection includes clean-up of contaminated soil and water.

Source: The Star

Medical Product with NCD

Prudential may roll out medical products with No Claim Discount (NCD) in Malaysia. There are also 2 to 3 new retirement products in the plan.

The Company will also spend RM2 mil in rebranding, with a 10-week campaign themed "The Face You Can Trust".

Some facts/statistics/strategies:

• New business annual premiums: RM606 mil (2007) vs RM496 mil (2006), growth rate: 23%
• Market share: 21% (2007), 19% (2006)
• Build other distribution channels: direct marketing, online technology and bancassurance
• Agency force 9,000 (current), 14,000 (2010)

Source: Business Times

News in Brief

1. Prudential and Bank AlJazira in joint venture to conduct takaful business in Saudi Arabia. More >>
2. Takaful Ikhlas provides Group PA cover for 104,480 Rukun Tetangga members and paid out RM400,000 claims so far in 2 years. More >>
3. Axa Affin Life launched an online game on balancing wealth and quality of life, with top prize of RM50,000.

Insurance for Unborn Babies

ING Australia has launched what is likely to be the world's first insurance product for unborn babies. The policy insures against birth complications, still birth and defects such as Down syndrome, spina bifida, blindness, deafness, cleft palate and heart disorders. The sum assured is A$50,000 and women between ages 16 and 40 are eligible to purchase. There is a 12-month waiting period and the cover ends on the child's 2nd birthday. Premium is A$439 for age 32 and double that for age 40.

The insurance plan recognises the trend in Australia where the median age of 1st time mothers has increased from 27 in 1985 to 31 currently. The risk of pregnancy complications and birth defects increases with the age of the mother.

While the product may be innovative, the medical experts seem to be sceptical. NSW Midwives Association claimed that ING was adopting marketing fear strategy and the Royal Australian and New Zealand College of Obstetricians and Gynaecologists warned that women could be frightened into paying for insurance they didn't need.

Source: The Sydney Morning Herald

Reinsurance in Labuan Grew Strongly

According to Lofsa Annual Report 2007, reinsurance business grew by 40.3% in 2007 to reach US$919.2 mil.

62% of the premiums were from outside Malaysia.

The retakaful contributions also grew 42.8% to reach US$108.4 mil.

Source: Lofsa

Manulife Interested in Takaful

Manulife has expressed interest in acquiring company with a takaful license but is not currently in talks with potential sellers. Manulife is more interested in family takaful than general takaful.

The following are also in Manulife's plans:

• Set up or acquire an asset management company
• Launch a retirement income product middle of 2008

Source: The Star & Business Times

MNRB Retakaful to Breakeven in 3rd Year

MNRB Retakaful targets to breakeven in its 3rd year of operations. The company started operations in August 2007.

Gross contributions for 1st financial year should come in at RM20 mil.

Going forward, overseas business is expected to contribute 70% of revenue. Countries targeted by MNRB are Kuwait, Saudi Arabia, Indonesia, Brunei, Sri Lanka and Pakistan.

MNRB will focus mainly on general retakaful business.

Source: Business Times

STMB 1st Capital Protected ILP

Syarikat Takaful Malaysia Berhad (STMB) will launch its 1st capital protected investment-linked plan - myAL-AFDHAL, next month. Citibank is the structure provider for this product.

Some of the notable features of myAL-AFDHAL are:

• It is on wakalah model (3% wakalah fee), not the normal mudharabah adopted by STMB
• Tabarru' of 0.5% of single contribution for the 5-year term
• Offer period: 2/5/2008 to 15/6/2008
• Minimum fund size: RM50 mil
• Fund management fee of 1% p.a.
• On death, pays higher of unit value of sum covered
• Partial withdrawal will void the capital protection on the remaining fund balance
• Surplus sharing on risk fund is 50:50
• Health declaration for investment up to RM1 mil, medical underwriting otherwise

Source: STMB

MNRB to set up Actuarial Consulting Firm?

Apparently MNRB is thinking of setting up its own actuarial consulting firm in future.

In the past, MNRB has been giving out actuarial scholarships. It is keen on producing more qualified actuaries in Malaysia and eventually consider setting up a company specialising in actuarial science. The company will be 49% owned by MNRB and the rest owned by the qualified actuaries in the company.

Is this a dream likely to be realised and how soon? What do you think?

Source: Business Times

Takaful Ikhlas Targets 6 Million Clients

After spending at least 1/2 hour scratching my head, I think I finally figured out what the above eye-catching news heading really mean.

My first interpretation on the heading was Takaful Ikhlas would get 6 mil clients within 12 months for its Medic Assist Takaful, which is a typical H&S scheme. The 6 mil figure would have put Takaful Ikhlas the largest insurer/takaful operator in Malaysia in terms of policy owners, overtaking the big giants including Great Eastern, AIA, ING and Prudential!

Also given the cheapest contribution for Medic Assist Takaful is RM257, 6 mil customers would bring in at least RM1.5 bil contributions, this is much higher than the 2009 target set by Takaful Ikhlas for the whole company, i.e. RM520 mil.

6 mil clients also means about 1 in 4 Malaysians would sign up for the scheme!

My conclusion is the news heading is misleading, "targets" does not necessarily mean "100% success rate". The 6 mil could be the number of unit trust investors in Malaysia (does anyone know how many unit trust investors are there in Malaysia?).

[Latest News] It is confirmed that the 6 mil clients is a mistake! An advertorial published in Business Times on 22 April confirmed that it should be RM6 mil contributions instead. This works out to be 6,000 clients per year!!!

Source: Bernama & Takaful Ikhlas

Housing Loan Scheme Promising for Takaful Ikhlas

Takaful Ikhlas is counting on the government housing loan scheme to bring in RM70 mil contributions for FYE March 2009. For FYE 2008, the scheme contributed RM40 mil.

Earlier, it was reported that for FYE 2009, the target contributions for Takaful Ikhlas would be RM520 mil. More »

Under the housing loan scheme, both family and general takaful plans are offered.

Source: Bernama

India is Short of Actuaries

India has a 20-25% shortfall of actuaries. The shortage is the worst in the general and health insurance fields.

A qualified actuary with 10 years of experience can earn around Rs 85 lakh (USD214,000) p.a. in India.

According to the membership statistics of the Institute of Actuaries of India:

• Number of fellows: 217 (31/3/2007), 213 (31/3/2006)
• Number of fellows resident in India: 129 (31/3/2006)
• Number of fellows age <= 65: 137 (31/3/2006)

Assuming the same proportion of actuaries younger than age 66 resides in India, we estimate that there are around 83 fellows in active employment in India.

Source: Business Standard & Institute of Actuaries of India

Prudential BSN Takaful Grew 70%

Prudential BSN Takaful business enjoyed a 70% growth rate in Q1 2008 compared to the same quarter last year.

The takaful business now represents 28% of the total Annual Premium Equivalent (APE) in Malaysia, doubles the 14% last year.


Source: Prudential

STMB's AA (SQR) Rating Withdrawn

Syarikat Takaful Malaysia Berhad (STMB) has its AA Shariah Quality Rating (SQR) withdrawn by the Islamic International Rating Agency (IIRA). The AA (SQR) rating was assigned in May 2007 but not renewed by IIRA.

The non-renewal apparently is due to the resignation of 2 senior management persons from the Shariah compliance department.

STMB has informed IIRA that they are finalising the recruitment of 1 Shariah person.

Sources: AME Info & IIRA

Is GCC the Biggest Takaful Market in the World?

Ernst & Young seems to think so. In E&Y's World Takaful Report 2008, E&Y put Gulf Cooperative Countries (GCC) contributions at > $1 bil compared to $2 bil of global contributions in 2006. Out of the 133 takaful operators in the world, 59 are within the GCC.

The takaful industry is also expected to grow at 20% p.a., reaching $4.3 bil contributions in 2010. This is actually still small compared to world insurance premiums of $3.7 trillion.

However, not everyone agrees with E&Y. Solidarity Group puts Asia at 53% market share and expects it to continue to be the dominant market.

If E&Y is correct, then Malaysia will have something to worry about. With the launch of Malaysia International Islamic Financial Centre (MIFC) initiative a few years ago, if GCC is the dominant takaful market, does it mean that the MIFC has not achieved the intended results?

Source: Gulf News

Source: Gulf Daily News

Post your comments below.

IAG - A Takeover Target

Insurance Australia Group (IAG) has become a takeover target of QBE Insurance Group Ltd. However, until the time this blog was posted, the offer made by QBE was rejected by the Board of IAG on the reason that the offer made was inadequate and not attractive.

IAG owns 30% of AmAssurance in Malaysia.

Source: Bloomberg

AXA Affin's Corporate Activities

AXA Affin General Insurance Bhd is currently involved in 2 potential M&A deals: merger with Boustead Holdings Bhd's BH Insurance (M) Bhd and acquisition of MAA.

Other business information:

• Total gross premium RM312 mil (2007), growth of 4.1% (industry average 4.07%)
• 1,500 agents nationwide, incl. 273 in East Malaysia
• Targets to add 15% more agents in West Malaysia in 2008
• Business mix: motor insurance (45%), commercial insurance (30%), health & marine
• Profit margin 16%, top 5 most profitable
• Market share 2.7%, ranked 18 out of 35

Source: The Star

MAA's Global Natural Resources Feeder Fund

MAA International Assurance Ltd will launch a new feeder fund on 28/4/2008 - Global Natural Resources Fund.

The fund will invest in equities of global companies involved in the extraction, processing, transportation and distribution of natural resources.

Minimum initial investment is S$2,500, minimum top-up is S$1,000, 1% free group life insurance is given on the total investment.

Expected annual return is 20%, expected sales is S$30 mil over 12 months.

Source: The Star

ACR Retakaful

Business Times reported that Khazanah will set up the 3rd retakaful operator in Malaysia named ACR Retakaful.

• Capital of US$100 mil.


• Owned by Khazanah (40%), Dubai Islamic Investment Group Ltd (40%) and Asia Capital Reinsurance Group Ptd Ltd (ACR) (20%).


• Operational license expected to be granted by end of May 2008.


• Zainal Abidin Mohd Noor, the former CEO of Etiqa, is expected to be the chief.

Source: Business Times

STMB Consolidates

Syarikat Takaful Malaysia Bhd (STMB) will finalise the consolidation of its branches with those of Bank Islam by year end.

The number of branches of STMB will reduce to 70 from the current 100. The benefits of consolidation are cost savings and more effective bancatakaful.

Other initiatives of STMB are:

• Expand alternative distribution channels: corporate agency, tied agents and financial advisers.


• Implement electronic imaging.


• Roll out 1st structured investment product by end of April.

STMB also expects the talk with strategic partners would bear fruits within the next 2 months. Currently 2 potential partners are involved: Abu Dhabi-Kuwait-Malaysia Strategic Investment Corp and Islamic Arab Insurance Co PJSC.

Source: The Star

Kurnia Goes Cambodia

Kurnia is venturing into Cambodia's life and general markets with joint venture partner Canadia Investment Holding Plc (CIHP). The joint venture company is called Cana Kurnia Insurance Plc.

Kurnia will own 49% of Cana Kurnia. CIHP owns the largest bank in Cambodia called Canadia Bank Plc.

Source: Bursa Malaysia

Lonpac's New CEO

Tan Kok Guan is the new CEO of Lonpac Insurance Bhd, effective April 9, replacing Tee Choon Yeow. Tee will remain the CEO of LPI Capital Bhd.

Source: The Star

Prudential's New CEO

William (Bill) Lisle will be Prudential Assurance Malaysia Bhd (PAMB) new CEO by end of April, apparently pending BNM's approval.

Bill will replace Tan Kar Hor who has been transferred to head Prudential Group's China life insurance business.

3 years ago, Bill was PAMB's general manager of business distribution.

Source: Business Times

MNRB to buy British Islamic Insurance

MNRB is entering the UK's takaful market through proposed 9.99% purchase of British Islamic Insurance Holdings Limited (BIIH).

BIIH has 2 wholly-owned subsidiaries: BIIH General Limited (general insurance business) and BIIS Limited (insurance intermediation services).

BIIH intends to offer general takaful products and would be the 1st independent wholly Shariah compliant entity offering takaful products in the UK.

The transaction is expected to complete by 30 June 2008.

Source: Bursa Malaysia

OCBC Owns 99.7% of Pacmas

At the close of the cash offer at 5 pm on 8 April 2008, OCBC Capital has successfully owned 99.7% of Pacmas shares, made up of:

• 62.59% acquired through cash offer
• 32.63% owned by OCBC at the time of making cash offer
• 4.48% purchased in the market during the offer period

Source: Bursa Malaysia

Allianz Targets 11% Growth

Allianz continues to target at double digit organic growth in 2008. The company acquired Commerce Assurance Bhd in August 2007 and does not rule out future acquisitions. The target set for combined ratio is not more than 95%.

Some statistics on Allianz:

• Secured RM994 mil gross written premiums (GWP) in 2007, made up of RM624 mil (life & general units of Allianz) and RM370 mil (Commerce Assurance Bhd).


• Recorded 10 to 11% growth in the last 4 years.


• Agency force of 8,000, main business contributor.


• 2nd largest general insurer in Malaysia with 10% market share.

The integration process post acquisition of Commerce Assurance is expected to complete by Q3 or Q4 of 2008. The new head office of the group will be in Plaza Sentral.

Source: Business Times

Actuary has an Edge

Utar recently organised a talk by Dr Tan Ken Seng of the University of Waterloo, Canada, entitled "Educating the 21st Century Actuary".

Dr Tan's advices to the students are:

• To aim for full professional qualifications to gain the edge.


• To improve on report-writing, marketing and research skills.


• Stochastic modelling becomes increasingly important.

http://thestar.com.my/education/story.asp?file=/2008/4/6/education/20788486&sec=education

Anugrah Life through Mayban Fortis

Maybank is going to acquire 60% of PT Anugrah Life Insurance, a subsidiary of PT Panin Life Tbk, through Mayban Fortis Holdings Berhad. The earlier plan was for Maybank Group to acquire directly.

The change was as a result of the regulation of the Ministry of Finance of the Republic of Indonesia which requires a foreign holding company to maintain a majority of its portfolio in insurance business should it wish to become a shareholder of a local insurance company.

http://announcements.bursamalaysia.com/EDMS%5Cedmsweb.nsf/LsvAllByID/48256E5D00102DF448257421003635AF?OpenDocument

Munich Re Retakaful Launched

Munich Re has become the 2nd retakaful operator after MNRB to set up an operation in Malaysia.

Some facts on Munich Re Retakaful:

• Working capital of RM25 mil.


• Writing both general and family retakaful business.


• Malaysia office would be the hub for global retakaful activities.


• Expected to breakeven within 3 years.


• Currently 5 staff.


• CEO: Dr Ludwig Stiftl.

http://www.btimes.com.my/Current_News/BTIMES/Friday/Nation/20080404004315/Article/

CIMB Aviva Launched MyKid Edu

CIMB Aviva launched MyKid Edu Plan and MyKid Edu Takaful Plan, distributed through CIMB Bank and CIMB Islamic.

http://www.bernama.com.my/bernama/v3/news_lite.php?id=323978

MyKid Edu is an education investment-linked plan. The plan comes with a compulsory premium waiver rider.

http://www.cimbaviva.com/bancassurance.html#li4

ING & JIHC in Stalemate

ING's proposal to Joint Inter-hospital Healthcare Committee (JIHC) on securing a volume discount has been turned down by the latter.

JIHC's concern is it may compromise the quality of healthcare and breach the Private Healthcare Facilities and Services Act (PHFSA) 1998.

The JIHC committee represents >600 specialists in 8 hosipitals in the Klang Valley:

• Pantai Medical Centre
• Sunway Hospital
• Prince Court Medical Centre
• Gleneagles Intan Medical Centre
• Assunta Hospital
• Ampang Puteri Hospital
• Tawakal Hospital
• Damansara Specialist Hospital

With the stalemate, ING's policyholders apparently now have to pay upfront and claim later when they see JIHC's specialists.

http://www.thestar.com.my/news/story.asp?file=/2008/4/3/nation/20831586&sec=nation

New COO for Uni.Asia General

Mohd Fauzi Yaakub is now the new Chief Operating Officer of Uni.Asia General.

He was previously the senior general manager of the corporate services division with responsibilities over day-to-day operations of branches, marketing and corporate communications, IT, compliance assurance, legal affairs and recovery, property and general administration.

He joined Uni.Asia General in July 2000 as chief internal auditor.

http://biz.thestar.com.my/news/story.asp?file=/2008/4/2/business/20816861&sec=business

10% Mudharabah Payment

Syarikat Takaful Malaysia Bhd (STMB) has declared 10% Mudharabah payment to general takaful products participants.

Eligible participants are those holding general takaful certificates that have expired between 1/3/2007 to 31/12/2007 and have made no claims. There was no news on any Mudharabah payment to family takaful participants.

Future payments of Mudharabah are expected to be smoother with the implementation of new system and the re-engineering of business processes.

Last month, a reader wrote to Malay Mail to complain about the delay in getting discount on his motor policy which they company explained was due to the upgrade of system and business processes.

http://tehloohai.blogspot.com/2008/03/takaful-refund-delayed.html

http://www.takaful-malaysia.com/V5/index.php?option=com_content&task=view&id=217&Itemid=1

Manulife's Strategies

Manulife has embarked on a three-pronged strategy for 2008:

1. Reorganise internal structure: setting up holding company and asset management company.


2. Enhance education and retirement planning products, including launching a lifetime annuity product targeting higher income group.


3. Raise the professionalism of the agency force: improve productivity, provide quality advice and CPD.

Manulife's statistics:

• Sales (AP) RM50 mil (2006) RM71 mil (2007) Growth of 40%


• Growth over 2006 Agency (24%) Bancassurance (81%)


• Pre-tax profit RM71 mil (2006) RM114 mil (2007)


• Market share 12th (2006) 10th (2007)


• Active agents 1,286 (2006) 1,305 (2007) 10% growth target for 2008


• Productivity of agents improved over 20% in 2007

http://biz.thestar.com.my/news/story.asp?file=/2008/4/1/business/20803738&sec=business

MNRB's New Group CEO

Anuar Mohd Hassan (pictured) has been appointed new President and Group CEO of MNRB. He was previously President & CEO of Malaysian Reinsurance Bhd, a subsidiary of MNRB.

Meanwhile, Hashim Harun, formerly CEO of Uni.Asia General Insurance Bhd, has taken over as the President & CEO of Malaysian Reinsurance Bhd.

Both appointments take effect on 1 April 2008.

http://www.btimes.com.my/Current_News/BTIMES/Tuesday/BizBriefs/mnrb31.xml/Article/