Sunday, May 17, 2009

AXA Affin sees great potential for local takaful biz


By Alfean Hardy
AXA Affin Life Insurance Bhd, which is 51%-owned by Affin Holdings Bhd, is bullish over the recent liberalisation of Malaysia's financial sector and sees a lot of potential for conventional insurance and, more specifically, in takaful, its chief marketing officer Nicholas Kua Choo Ming said.
Among the measures announced by the government were the issuing of two new family takaful licenses, the increase of foreign equity holdings to 70% on a case-by-case basis, no restrictions on locally incorporated foreign insurance firms/takaful operators establishing branches and the lifting of restrictions for such operators to enter into bancassurance/banctakaful arrangements with locally-based financial institutions.
The 49% balance in the company is held by global financial protection and wealth management giant AXA Group. The JV was incorporated in early 2006.
Speaking to The Malaysian Reserve last Friday, Kua said the local industry had been acknowledged as one of the more promising ones in the region.
"We are not at the level of maturity where you'd probably have a lot of difficulty in getting higher penetration of the market," he said.
"We're only at about 40% versus Singapore, which is already at 90%, and the like of Japan, which is at 200%. There are a lot of opportunities and the same optimism is felt throughout the whole industry. You have so many new entrants trying to grab a pie of the Malaysian market over the last two years alone.
"This tells you that foreign players continue to view Malaysia as a very promising market. You don't see the same type of activity in Singapore, Thailand and the Philippines, for instance," he added.
Kua said the liberalisation could probably see a lot more foreign players being keen on the local market, with an eye to seek out strategic partners with the local players.
"Then there's the new takaful licenses, which means more players into the market. This only shows that the regulator and the industry at large views the market as a very promising one.
"The same applies for AXA Affin as well. We wouldn't have formed the JV back then if we didn't see the opportunities in the market," he added. Kua said he was not surprised by the government's move to liberalise the financial and insurance sectors here.
"If you look at the region, Singapore has shown aspirations to grab a piece of the pie. Hong Kong is keen and Indonesia, of late, has also announced their aspirations to be a hub as well," he said.
"Malaysia has a head start and does have the perfect infrastructure and talent to spur the growth of Islamic finance and insurance to become the premier Islamic finance hub in the region," he added.
AXA Affin does not currently have a takaful wing and, while Kua would not comment on the firm's plans on the matter, he said who would not want to have an Islamic insurance division here at this point in time.
"From an industry perspective, who wouldn't be keen on those two new licences? I'm sure everyone's eyeing that," he said.
While the company did not track the takaful sector numbers per se, he said that independent evaluation provided a lot of positives for firms looking to venture into the local takaful segment.
"Any interested player coming into this market, looking at the statistics, would have a lot of confidence that this is the market to get into as a new start-up," he added.

(This story appeared in The Malaysian Reserve on May 18, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)

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