Takaful Ikhlas eyes rental, property investments

By Alfean Hardy

Takaful Ikhlas Sdn Bhd, which has invested RM97 million on two tower blocks in Bangsar South, Kuala Lumpur, is targeting similar investments going forward given the long-term sustainability of rental income for revenue generation, its president and chief executive officer Datuk Syed Moheeb Syed Kamarulzaman said.

The Islamic insurance firm used RM87 million of its policy holders’ funds to buy the commercial property and another RM10 million was invested in renovating both towers. The company has more than a million individual and group policy holders to date.

The unit of main boardlisted MNRB Holdings Bhd moved into all of Ikhlas Point Tower 11A and three floors of Ikhlas Point Tower 11 on Feb 1, 2010. Covering a built-up area of 99,286 sq ft in total, some 32,000 plus sq ft in one of the towers have been earmarked for rental/future expansion.
Speaking at a media briefing in Kuala Lumpur last Thursday, Syed Moheeb said, essentially, the buildings were not Takaful Ikhlas’s.
"These buildings were paid by policy holders’ funds coming from our risk fund. So, inevitably, the policy holders are the owners of the buildings, we’re merely renting it from them.
"We chose this strategy because we wanted to ensure rental income to policy holders and, over the last few years, one of the better revenue generating strategies is rental income, which is more sustainable over the long-term," he said.

Going forward, he said Takaful Ikhlas would make use of either shareholders’ funds or policy holders’ funds to purchase buildings and then rent them out to generate rental income.
"By doing this, we will slowly acquire property. Eventually, we also want to house all our branches in our own buildings. We’re not sure yet whether we will use funds from our shareholders or from our policy holders (when we buy these buildings)," he said, adding that Takaful Point was the firm’s first property investment.
Syed Moheeb said Takaful Ikhlas could have ventured into property investment earlier, but he felt that the firm needed to ensure that, whatever it bought, would have made an impact to investment income.
"The fact that (the two towers) have a capital appreciation of more than 20% indicates that this was a good decision.
"Among some of the things that we’re looking at will be rentable office premises and it won’t be anything else at this point in time. Our investment policy has been very cautious and has been more towards capital preservation and, in any thing that we do, we have to make sure that we don’t have to answer to any bad decisions later on," he said.
Syed Moheeb said Takaful Ikhlas was currently looking at housing two new branches in Klang, Selangor, and Kuala Terengganu, Terengganu, by middle of the year in new properties.
"At this point in time we haven’t identified yet any properties yet (for these two new branches). If you look at the 10 branches that we have currently, these are the areas that we would be looking to make investment opportunities," he said.
The Islamic insurer currently has branches in Kota Baru, Johor Baru, Sungai Petani, Ipoh, Kuching and Kota Kinabalu in Kelantan, Johor, Kedah, Perak, Sarawak and Sabah respectively. Asked on how much would be set aside for Takaful Ikhlas’s property buy war chest going forward, Syed Moheeb said the company’s investment strategy was set by the board, which decides how much went into equities, governmentbacked securities and others.
"Where property is concerned, we’re looking at not more than 20%. In the shorter term at least, until our financial year ending Mar 31, 2011, we will cap this at 20%," he said.

(This story appeared in The Malaysian Reserve on 1 March 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh, at http://islamicfinanceasia.blogspot.com/)

Zainuddin: From humble beginnings to moving mountains

By Alfean Hardy
Options were not plentiful if you were a secondary school graduate in Rembau, Negri Sembilan, in the late 70s. According to HSBC Amanah Takaful (Malaysia) Sdn Bhd executive director and chief executive officer Zainuddin Ishak, the most most people could look forward to was working in a factory in Senawang.
"My father was a rubber tapper and my mother a housewife. There were eight of us in the family and life at that time was borderline poverty or poverty. I went to a kampung school in Rembau and graduated from a secondary school that was also in Rembau," he told The Malaysian Reserve recently.
With no career advisers around to guide an impressionable youth from a large family, perhaps that was where Zainuddin would have ended up. It was sound advice from his eldest brother, a former Institut Teknologi Mara (ITM) student, that changed his life. "He advised me to take up an insurance qualificaion. He told me it was a very difficult course, an external course with the professional papers coming from the UK.
"He said that amongst his friends who managed to clear some of the papers, and not the full syllabus, made it big time in the insurance industry. So, I said to myself, it sounds good, make money, why not," he added. This, Zainuddin said, was in 1984.
"To cut a long story short, I got accepted into ITM (now known as Universiti Teknologi Malaysia, or UITM). Prior to doing the associate (paper), you had to sit for the certificate. "There were 80 of us in that batch class of 1984 sitting for the certificate. Only 30 went on to do the associate. Of that, only four of us made it through," he added.
Zainuddin said, those who did not clear the associate papers could still get a decent job. For him, though, the challenge of being able to take on a difficult endeavour was a prime motivator and it was this drive within him, he felt, that helped him make it all the way through. "I made it, not because I'm clever, but because I've always had the tenacity and the stamina to complete any task placed before me. I guess that's my strong point. The more difficult it is, the more determined I am to clear the hurdles," he said.

The start of a long and fruitful career in the industry began in 1989, as a management trainee at Aviva with the possibility of getting a full time job within six months. Unfortunately for Zainuddin, this opportunity came at the tail end of a recession, which spelled stiff competition for a permanent position. "When I first joined the industry, because (of the) recession, there were a lot of unemployed people in the industry. There was big competition to get a permanent position (in Aviva) but the internship gave me the opportunity to work in a world-class organisation.
"My first real job was after that, as a full executive, was with a company owned by Kompleks Kewangan in the early 1990s called Trust International Insurance (TII), developing a bancassurance channel for the company. "I got my exposure in sales in the insurance industry," he added. That break with TII was pivotal for Zainuddin. After three years, he went on to join Norwich Winterthur before moving on to Malaysia National Insurance Bhd (MNI) and eventually to American National Insurance, which was owned by the New Straits Times Press Bhd (NSTP) group at the time. "I stayed there for a long while. What changed was the company. Because of a series of acquisitions, from NSTP to Bank of Commerce to CIMB, I stayed with one company that changed its shareholders until I became chief executive officer of CIMB Bank Aviva Takaful," he added.

All in all, Zainuddin stayed with the firm for almost 14 years, slowly and steadily moving up the ranks every two years or so. Eventually, though, it was the challenge of something new that attracted him to make the change in mid-January 2009. "If you look at the takaful industry, there are various stages of maturities amongst the eight companies here. HSBC clearly has gone through its crucial, formative stage.
"When you're at the formative stage, it's good to have internal people because you understand the people and the culture.
"When you want to take it to the next stage, you need to get outside people and bring in the industry expertise to come in and take a company to the next level. "I felt that this was a good time for me to come in and bring the company to that next level. HSBC is an admired brand and it gives you more opportunities and avenues to grow," he said. Formed in 2006, HSBC Takaful is a joint venture (JV) that is 49%-owned by HSBC Insurance (Asia Pacific) Holdings Ltd, 31%-owned by Jerneh Asia Bhd and 20%-owned by the Employees Provident Fund (EPF).
To Zainuddin, his challenge for this relatively new venture was to take it to the next level. "In everything, nothing is ever good enough. Every day is a challenge, nothing is ever good enough. Every day you're looking at opportunities to improve from yesterday.
"We're always improving. It's always the next level, it's always a moving target. You've got lots of room to improve. Every day is about improving what we are today," he said.
"Another challenge is to bring takaful to the HSBC world because Malaysia is the first takaful outfit (within the group) and vice versa. "We need, (and) the industry certainly needs, big names like HSBC to champion takaful so that it will make takaful very prominent. That's my challenge, how to fulfill the vision, the set of targets, etc," he added.
The task for the boy from Rembau is certainly a challenging one, what with a very competitive industry and a global economy that has a bad case of the flu but, somehow, you sense that, with his drive, determination and desire to succeed, Zainuddin will certainly move mountains to get the job done.

(This story appeared in The Malaysian Reserve on July 22, 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)

Exim Bank to introduce takaful products next yr

Export-Import Bank of Malaysia Bhd (Exim Bank) is poised to expand its reach further by offering better options to customers via the introduction of Shariah-compliant products.
Islamic financing has been identified as a new area of growth for the bank in view that Malaysia is expanding trade involving the Organisation of Islamic Countries (OIC) member states.
The bank has envisaged that by end-2009, it would have sufficient Shariah-compliant banking products to cater for the needs of its growing global customers, said managing director/CEO Mohd Fauzi Rahmat.
"We are also planning to introduce takaful (Islamic insurance) products by next year," he said in a statement on Monday.
Exim Bank supports the financing needs of Malaysian companies and investors with operations in four continents across two dozen countries worldwide. Asean and Middle East will continue to be major contributors to the bank's portfolio with about two-third of its exposures while Africa, Europe and Asia Pacific make up the rest.
According to Fauzi, the bank is committed to continue its drive to support local exporters and investors extending their international business by providing banking facilities and insurance coverage particularly those that significantly contribute to the extension and enlargement of Malaysia's export volume, value and markets.
While the bank recognise that 2009 would be more a challenging year amidst global economic uncertainties, it would continue to provide support to its existing and potential customers and partners who are willing to take the challenge and participate in the still significant global trade and investments and to be ready for future businesses when the economy picks up.
In 2008, Exim Bank approved a total of RM460.3 million direct loans and guarantees to customers in various sectors including construction, investment, manufacturing and commodity trading.
In addition, the Export Credit Refinancing, extended via participating financial institutions and by far the single largest product of the bank by volume, contributed a total of RM9.5 billion in loan disbursements compared with RM8.4 billion in the previous year.
In trade credit insurance, it has a total of RM2.43 billion business in force in 2008, against RM2.78 billion in 2007. As for commercial and political risk insurance business, the bank approved RM120 million worth of business last year reflecting it cautious approach in light of the global economic crisis.
The total Malaysian exports insured for 2008 amounted to RM2.55 billion and is spread over 72 countries primarily across Asia and Africa.
"Exim Bank maintained a positive and stable performance for both banking and insurance businesses although a more selective approach has been adopted to respond to the current global economic situation," Fauzi said.
To strengthen its capacity to undertake more businesses, the shareholders' funds of Exim Bank has increased to RM2.8 billion in 2008 from RM839 million a year ago. This would go a long way in ensuring that Exim Bank continues to thrive as a vibrant and active Development Financial Institution for Malaysian exporters and investors over the medium and long-term.

(This story appeared in The Malaysian Reserve on July 8, 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)

Takaful Malaysia eyes 50% market share in 2-3 years

By T Vignesh
Syarikat Takaful Malaysia Bhd (Takaful Malaysia) expects to capture slightly more than half of the takaful industry's total asset market share in the next two to three years despite the current economic crisis. Managing director Datuk Mohamad Hassan said the industry's total assets have reached RM12 billion and the company's share currently stands at RM4.05 billion.
"We are confident of achieving slightly more than the current takaful market rate, which is between 22% and 25% per annum," he told reporters after a signing ceremony with Standard Financial Planner Sdn Bhd (SFP) in Kuala Lumpur yesterday.
Takaful Malaysia became the first in the takaful industry to add professional financial advisors to its existing portfolio of distribution channels following the appointment of SFP to market its products. SFP has a nationwide network of more than 300 representatives of whom 75 are licensed financial advisors with Bank Negara Malaysia.
Mohamad Hassan said that this will enhance the penetration of the company's family and general insurance products into the middle-upper Malaysian market, thereby makes Takaful Malaysia's products more accessible to a wider customer base.
He said the company is confident of the selection of SFP due to its position as a market leader and largest independent financial advisory group in Malaysia. S FP is also the first financial planning group in Malaysia to hold both Financial Advisors (FA) and Corporate Unit Trust Advisor (CUTA) licences.
At the signing ceremony, SFP's CEO Alfred Sek said the past ten years have witnessed fresh changes to the financial planning industry and its delivery of financial advice in Malaysia.
He said that Takaful Malaysia will greatly benefit from this arrangement as its potential customers will develop full confidence in the products offered, through high quality independent advice from these Financial Advisors.
Meanwhile, Takaful Malaysia has plans to undertake a rebranding exercise to reflect its fresh characteristics in conjunction with its 25th anniversary this year.

(This story appeared in The Malaysian Reserve on July 8, 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)

Takaful Malaysia sees light at the end of tunnel

By Alfean Hardy
Syarikat Takaful Malaysia Bhd is seeing the light at the end of the global economic crisis tunnel and is planning to leverage on the improving e conomy and increasing customer appetite for investment products, its group managing director Datuk Mohamed Hassan Md Kamil said in a recent email interview with The Malaysian Reserve.
"We are of the view that the global economy will slowly stabilise towards the end of this year considering the massive stimulus packages and accommodative monetary policies introduced worldwide to support the downturn," he said. "Since equity markets normally recover a few months ahead of the economy, we expect the local market to steadily recover in the second half of this year.
"Hence, it is timely to offer an investment-linked product with equity exposure to take advantage of the upside when market recovers.
"We believe that investors are constantly looking for the best investible asset to invest in and Takaful myInvest provides them more alternatives to diversify their portfolios while at the same time obtain takaful protection," he added.
Takaful Malaysia recently launched an open-ended investment-linked product, Takaful myInvest, to cater to investors who want takaful protection while looking for alternatives to diversify their portfolios.
The product offers takaful protection in the event of death or total permanent disability during the investment period. It has four different investment funds — Dividend Fund (Irad), Blue Chips Fund (Istifad), Index Tracker Fund (Ihfaz) and Growth Fund (Ittihad) — that can be mixed to suit different investment appetites.
The funds will be invested in Bursa Malaysia-listed Shariah-compliant stocks approved by the Securities Commission's Shariah Advisory Council. The product is also designed to be invested in Islamic deposits and the money market.
Mohamed Hassan said Takaful myInvest is for all types of investors who hold an optimistic view on the equity market's recovery locally and would like to position their investment portfolios to take advantage of that recovery as well as the unlimited upside of potential returns that equity investments offer.
"While we are aware of the opportunities offered in the overseas markets as a result of the financial meltdown, we opine that the risks are also higher, which we need to avoid.
"The local market is more defensive in nature but it also offers tremendous growth," he said. "With the current economic condition, domestic investments would be the most prudent and best way to contain risk exposure.
"The domestic equity market still offers decent earnings in terms of dividend as compared to other regional markets, and money market investment ensures that liquidity is intact while at the same time offering the opportunity of stable returns," he added.
Asked whether Takaful Malaysia had an overseas variant of Takaful myInvest in the pipeline, Mohamed Hassan said the company was constantly working to offer innovative products to its valued customers.
"As such, there are plans on launching more investmentlinked products that will be associated with the performance of foreign investments, for example, structured products, provided that the global sentiment improves and that economic recovery is forthcoming," he said.

(This story appeared in The Malaysian Reserve on June 10, 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)

Firm eyes Johor to boost takaful business: Star

By ZAZALI MUSA
JOHOR BARU: Prudential BSN Takaful Bhd (PruBSN) sees Johor as its next big market for the takaful business outside the Klang Valley.
Its chief executive officer Mohammad Salihuddin Ahmad said, in view of the good prospect, the company had decided to open its Southern Region Business Centre in Taman Austin Perdana near here.
PruBSN provides a wide range of services and acts as a one-stop centre where customers can make enquiries and seek advice from regional agents at the centre.
The Johor Baru centre is the company’s second after its Shah Alam branch was opened recently to serve customers in the central region.
“Johor, with a 3.17 million population of which 66% is of working age, is a large market that the company cannot ignore,’’ he said at the centre’s opening recently.
Salihuddin said that development activities at Iskandar Malaysia also provided good business opportunities for the company.
He said, apart from targeting Johoreans, the company would look at Singaporeans, especially those living in Johor Baru, as customers.
He said the company would open five new branches this year at state capitals in the northern region, east coast states, Sabah and Sarawak.
“We want to strengthen our position in the takaful industry,’’ he said.
Salihuddin said there was enormous potential for the industry to grow as its market penetration was only 7.7% compared to 40% for conventional insurance products.
He said the company wanted to create awareness that the takaful system was for everyone and it had nothing to do with one’s faith
PruBSN was founded in 2006 and has 216,308 policyholders of whom 35% are non-Muslims, and 10,000 agents of whom 50% are non-Muslims.

(THE STAR, Thursday June 4, 2009)

MAA Takaful gets syariah expert to stay ahead of competition

By DALJIT DHESI
MAA Takaful Bhd aims to edge ahead of others in the Islamic insurance market through initiatives such as being the first local takaful player to have a syariah expert on its board.
Chief executive officer Salim Majid Zain says having an expert syariah adviser on board will help the company make informed strategic decisions and help it face growing competition in the industry.
“We are serious in ensuring that all aspects of our operations are syariah-compliant and certainly will have an edge over other players with the presence of our syariah adviser to provide us with relevant expert advice on syariah principles.
Salim Majid Zain “Having an expert on the board will also enhance our expertise in Islamic finance, corporate governance as well as give more confidence to our target market customers,’’ Salim says in an interview.
As one of the latest entrants into the takaful market, the company has aggressive plans to grow its market share, he says, adding that the company is recruiting talented agents.
At present the company has about 15,000 agents, of which 30% are active.
The company has also introduced customer-centric financial planning and sales-automation software in an effort to enhance service.
Investment-linked funds is also one of the areas of focus for the group.
To this end, Salim says MAA Takaful will also be hiring a top fund manager to assist in the development and management of these funds.
Investment-linked funds will continue to be the main contributor to family takaful business, he adds.
The company’s market share in investment-linked takaful business last year for regular new business was 13% and about 10% for single contribution (premium).
It is targeting a 35% growth in regular investment-linked new business by the end of the year.
There are eight players in the takaful market currently and the granting of up to two new family takaful licences this year under the Government’s liberalisation of the financial sector is expected to further heat up competition.
Asked on how it would compete with other new players coming on board, Salim says: “The new players will certainly increase competition and this would also pave the way for greater acceptance of takaful as an alternative to insurance and traditional invesment products.
“MAA Takaful inherits the MAA brandname which has been long established in Malaysia. It is known and well represented in the multi-ethnic population which provide the cutting edge in growing our business and retaining our customers.”
MAA Takaful is a 75:25 joint venture between MAA Holdings Bhd and Bahrain’s Solidarity Company BSC.
(The Star, Saturday May 9, 2009)