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)

Prudential’s biggest ad campaign

Prudential Assurance Malaysia Bhd has allocated RM7mil for its biggest advertising campaign to-date to promote its new medical insurance plan, PRUhealth, reports The Star (July 18, 2009).
According to chief marketing officer Thomas Wong, the campaign starting July 20 via television, radio, print and outdoor advertising, is expected to generate a considerable amount of interest for the unique medical insurance plan, which rewards policyholders for staying healthy by giving them no claims bonus.
“We expect to secure a large proportion of new and existing customers for this first of its kind product in the market,” he said. One of the biggest medical insurers in Malaysia, Prudential paid a third of the industry’s medical costs last year, which amounted to RM900mil, the newspaper reported.

MMIP insurance covers now available at Pos Malaysia outlets

The Persatuan Insurans Am Malaysia (Piam) last week announced that Malaysian Motor Insurance Pool (MMIP) insurance covers will be available to the public at Pos Malaysia outlets, confirming an earlier report by The Malaysian Reserve.
With effect from July 10, it said private car and motorcycle owners can purchase MMIP's insurance covers from Pos Malaysia outlets throughout the country including Sabah and Sarawak.
In order to immediately address accessibility problems in Sabah and Sarawak, it said insurance for taxis and buses will also be made available from the same day, while those in Peninsula Malaysia from July 24.
"In the current scenario where the motor insurance market is experiencing high loss experience, many insurers have either declined or are scaling back on underwriting risks especially third party insurance. As such, an increasing number of motorists are turning to the MMIP for insurance cover," Piam said in the statement.
On July 23, The Malaysian Reserve reported that the central bank was on the verge of appointing Pos Malaysia Bhd as the agent for motorists to buy motor insurance from the industry pool, now that most insurers have declined to underwrite directly that segment of the insurance market.
It was reported that Pos Malaysia, the national postal services provider which has been in the red for financial years 2007 and 2008, will secure the contract to ensure that motorists are able to secure the third party insurance cover.
In the past weeks, more and more motorists found themselves turned away by their insurer when they wanted to renew their third party cover. Instead, they were told to shop around at other insurance companies that may still underwrite that segment, but to little avail as most general insurers and takaful operators have stopped underwriting directly the risk due to the segment's high loss experience.
In light of the increasing difficulty, Bank Negara Malaysia (BNM) which regulates the insurance and takaful industry had turned to Pos Malaysia to act as an agent on behalf of the motor insurance pool, the insurer of the last resort.
In its statement, Piam said in order to provide convenience and accessibility to the public, MMIP and Pos Malaysia have formed a strategic partnership to capitalise on Pos Malaysia's extensive network of offices throughout the country, in both the urban and rural areas. Pos Malaysia has 684 outlets nationwide which will provide MMIP insurance with 578 outlets in Peninsula Malaysia and 106 in Sabah and Sarawak, it said.
Furthermore, it said Pos Malaysia already has the necessary experience, human resources and IT facilities in place to provide the MMIP's insurance covers.
"This service will be an extension of the existing insurance renewal service that is already available at Pos Malaysia outlets as it currently acts as agents for eight insurance companies and three takaful operators," it said. In addition to insurance renewal, it said Pos Malaysia also offers the renewal of road tax for private vehicles on behalf of Road Transport Department. The MMIP was formed in 1992 to ensure that all vehicles on the road would not be without access to the minimum motor insurance cover required by law.
The MMIP also provides insurance for vehicles that are considered high risks and are unable or have difficulty in securing motor insurance from the normal market.
The liabilities and expenses of the MMIP are shared equally by all the 33 general insurance companies. Currently, the MMIP utilises the branch office networks of two insurers, Multi-Purpose Insurans Bhd and Uni Asia General Insurance Bhd, who serve as the servicing insurers for MMIP. Both these servicing insurers will continue to provide MMIP insurance covers together with the Pos Malaysia outlets.

(This story appeared in The Malaysian Reserve on July 13, 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)

Stronger growth seen for insurance

The insurance industry is poised to show improvement in performance in the second half of the year on the back of the recovery in the country’s export sector. Many insurance players are optimistic the performance for the second half will be better than the first half of the year underpin by the pick-up in economic activities spurring stronger export growth, reports The Star (July 11, 2009).
Great Eastern Life Assurance (Malaysia) Bhd director and chief executive officer Koh Yaw Hui told the newspaper: "All recent economic indicators suggest that the worst is over as the most affected export industry has been seen picking up and many companies have started recruiting.
"We expect the life insurance industry for the second half of the year to do much better than the first half. Personally, I think this year, the industry should end up having double-digit growth."
The growth driver that will steer the industry in the second half, it quoted general insurer LPI Capital Bhd chief executive officer Tee Choon Yeow will be the export and construction sectors.
The growth in the export industry, he adds, will help in the development of the marine and manufacturing sectors, which in turn will create greater demand for marine insurance as well as fire insurance, it added.
Manulife Holdings Bhd Group CEO Michael Chan was quoted as saying he is positive of the outlook for the insurance for the second half as insurance plays a very important role in one’s financial planning portfolio regardless of the economic cycles.
“Manulife’s insurance business showed strong growth in the second quarter as we launched new products and new agency performance management standards.
“We expect to see continued improvement in the second half as we roll out more new products, further drive the agency performance management standards and continue with our recruitment programmes,” Chan adds.

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Koh says Great Eastern has done very well in the first half of the year registering more than RM360mil in total weighted new business premium, which was more than 50% growth compared with the similar period last year in line with economic improvement.
Riding on the momentum of its strong first half result, he adds the company should continue to do well in the second half and meet its goal of RM800mil in total weighted new business premium for this year.
Based on the company’s first six months results, Tee points out that Lonpac is still optimistic of meeting its target of 15% growth in gross premiums by year-end.
Despite operating in a competitive and challenging environment, it turned in an impressive underwriting surplus of RM35.5mil representing a significant jump of 55.7% over the corresponding period of 2008. It also recorded underwriting surplus in all classes of insurance for the period.
Tee attributed the improved performance to prudent underwriting which has help it achieve profit and premium growth year on year.
He stress for insurers to improve performance amid the tough economic environment, they need to also display a high degree of transparency, corporate governance and professionalism.
According to Bank Negara’s statistics, gross premiums for general insurance last year stood at RM9.73bil against RM9.07bil in 2007. Net premiums for the period was also higher at about RM9bil as oppose to RM8.2bil (in 2007).
The Life Insurance Association of Malaysia (LIAM), in releasing its latest figures, says the industry delivered a strong first quarter (January-March) performance with new business sales growing by 14% on weighted premium basis.
Weighted premium is calculated as 10% of single premium plus 100% of regular premium.
The growth, LIAM says, was contributed by a strong performance in regular premium sales which went up by 24% compared to the same period last year.
Single premium business, however, registered a decline of 43% due to the global financial crisis and the decline in interest rate.
By class of business, investment-linked business, normally perceived as savings related products, registered a sharp decline of 23% by weighted premium.
The sale of single premium investment-linked declined from RM584mil in the first quarter of 2008 to a mere RM48mil in the corresponding period in 2009.
Traditional business, normally perceived as protection related products, on the other hand registered a strong growth of 43% during the period as opposed to similar quarter last year.
The sales of group insurance business remained fairly static with total premium of RM652mil compared to RM653mil a year earlier, LIAM says.

Key growth drivers

Koh said the two key growth drivers for the industry for the second half will still be the distribution channel as well as products.
“For us, the second half of the year will be an exciting period. Apart from continuing with our strategy to further enhance the productivity and professionalism of our 17,000 agency force, we will be distributing our products through the bancassurance channel under the financial sector liberalisation plan.
“Great Eastern is now able to have bancassurance tie-up with all the banks including foreign banks in Malaysia and hope to sell its first policy within the next one to two months,” he adds.
As far as distribution channel is concern, Koh says bancassurance is set to grow faster after the liberalisation as there is now no restriction of insurance companies tying up with banks to enhance their sales.
On the possible and likely challenges for the industry, Tee says it is the increasing claim trends from motorists, especially on bodily injury as well as from motor theft.
“We believe that the most important step that needs to be taken to address these issues is to practice prudential underwriting and to have in place strong claims management and underwriting processes,” he adds.
Koh says one of the challenges is for agents to advise consumers on the importance of financial planning to meet their future goals since people tend to be very prudent in their spending during the current difficult times.
As such, it is important that agents are professional and have the required knowledge and competency to play that role, he explains.
Chan views the state of the economy as a challenge for the industry. “The positive news is that the Government has announced numerous stimulus plans to help drive economic growth but the pace of growth may be impacted by external factors among which is the recovery of our export markets.
“Also, equity markets have not stabilised and should they continue to be volatile, it will impact investment income for insurers,” Chan says.

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)

Axa Affin sees plenty of potential post liberalisation

By Alfean Hardy
Axa Affin Life Insurance Bhd, a local-international joint venture (JV), sees a lot of potential for itself going forward in the new climate of liberalisation in the finance and insurance sectors, and is making plans to tap into these opportunities, its chief marketing officer Nicholas Kua Choo Ming said.
Despite being a relatively young start-up, Axa Affin sees a lot of opportunities to tap into going forward.
"When the liberalisation was announced, there were reports that spoke of opportunities for foreign players and that local players would feel more pressure," Kua said. "For Axa Affin, we see it as an opportunity. Granted that we're a start-up and we're entering into a new era of liberalisation, (but) we have a head start over new entrants coming in.
"We are already operating and, with our business model, we can outpace our competitors in terms of growth and emerge stronger and in a better position," he told The Malaysian Reserve in Kuala Lumpur recently.

Axa Affin is 51%-owned by local giant Affin Holdings Bhd and 49%-owned by global financial protection and wealth management giant Axa Group. The JV was incorporated in early 2006. Previously, both parties had been collaborating in the general insurance area for many years. Under the liberalisation of the finacial sector announced in April 2009, foreign equity participation in insurance and takaful JVs was raised to 70%. In addition, locally-incorporated foreign insurance and takaful companiess are now allowed to establish branches nationwide without restriction, while the restriction for such firms to enter into bancassurance/bancatakaful arrangements with banking institutions have also been lifted. Axa Affin's strengths, Kua said, stemmed from having strong parents.

"We're part of a very strong group, the Axa Group, which is a leading global player, and we have a strong shareholder in Affin," he said. "We are able to leverage on Axa's expertise and its robust business platform. We have access to eight other operating entities in Asia like China, India and Hong Kong. "Whether it's product innovation, distribution management and customer services, we have best practices that we can follow," he said.

"As part of the LTAT Group, Affin's business is across almost the entire Malaysian landscape and there are major opportunities to work with local groups, either via their group insurance or banking group," he said, adding that about half of Affin Bank's 80-plus branches already have dedicated Axa Affin advisers attached to them, making it the only bancassurance relationship of its kind currently. "And, as Affin expands, we will expand with them," he said.

Kua said one of the challenges going forward was building its distribution channel, which mostly consisted of its agency force and its bancassurance relationship with Affin Bank and other bank partners. "One of the challenges is growing our agency manpower. We're above 300 now and we aim to hit the 1,000 threshold by the end of the year," he said. He also said that the firm is upgrading the capabilities of its agency force to eventually see a fully professional force. The target time frame is by 2012, to coincide with Axa's global aspirations to be the preferred company of choice by then. Kua said Axa Affin was also able to sign up with other banks under a multi-provider bancassurance model.

"We are currently working with three or four other partners. With liberalisation, the key now is how we work with these banks (who have other providers as well) and make ourselves the preferred provider," he said. "Axa, on a regional basis, has always believed in a multi-distribution platform. The same is true whether we're in Thailand, the Philippines, Hong Kong or Indonesia. "We have both bank partners and the agency force. The blue print is there, (and) the business model is there in every entity that we enter into," Kua said.

(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)