MNRB aims to build up overseas ops
The Star, Monday September 29, 2008: OVERSEAS expansion will be a key strategy that MNRB Holdings Bhd will pursue actively for it to capture a slice of the world’s growing and lucrative takaful and reinsurance businesses.
President and group chief executive officer Anuar Mohd Hassan said developing businesses, especially takaful and reinsurance, beyond the Malaysian shores would be the main focus over the next few years as currently there was about 1.5 billion Muslims worldwide.
To this end, the company through its wholly-owned subsidiary, Takaful Ikhlas Sdn Bhd, is eyeing the Egyptian and Indonesian takaful markets, among others
Annuar Mohd Hassan
“We find there is good potential in Egypt as it has a huge population of more than 70 million coupled with its very low takaful penetration rate of about 1%, compared with Malaysia’s 7% and about 40% for its takaful and conventional insurance respectively.”
According to Anuar, MNRB has ventured into Egypt’s reinsurance market and this would give it an added advantage to venture into the takaful business there.
MNRB, he added, was in the process of identifying partner(s) to commence its takaful operations in Egypt.
With regard to Takaful Ikhlas’ operation in Malaysia, he said it would consider strategic partnership or alliance if there was a suitable partner that could provide a “quantum-leap effect” in terms of contribution and value add to the company’s business.
As takaful would be an important future growth driver for the company, Anuar expressed the hope to launch the product in Egypt by next year.
Indonesia is another country which MNRB hopes to stamp its mark in the Islamic insurance segment due to its huge Islamic population, low penetration, fragmented market and relatively limited takaful players.
“There are more than 30 takaful windows (not full-fledged Islamic players) in Indonesia and the potential is tremendous. Our only concern is that there is no proper legislation on Islamic insurance.
“Once the legislation framework has been established, there is nothing to stop us from venturing into this market,’’ he noted.
Through its wholly-owned reinsurance arm, Malaysian Reinsurance Bhd (Malaysian Re), MNRB plans to expand its reinsurance foreign business to more than 20% of its total revenue (portfolio) by financial year 2010, he said, adding that it was ahead of this target, as currently its foreign reinsurance business accounted for approximately 18% of the total portfolio.
Its overseas target markets for the reinsurance business include the Asia -Pacific, particularly Japan (which the company had made inroads earlier this year), the Middle East and North Africa and Eastern European countries.
At the domestic front, the company currently commands about 60% of the local reinsurance business.
MNRB’s recent acquisition of up to 9.99% in British Islamic Insurance Holdings Ltd (BIIH) served as a springboard for the expansion of its takaful and retakaful businesses overseas, particularlyin Europe.
In Britain alone, he said the market was huge with about 1.8 million Muslims with a combined spending estimated at £20bil and generating insurance premiums that almost equalled the whole of the Gulf region. The country is now the second largest insurance market in the world after the US.
BIIH had received authorisation from Britain’s Financial Services Authority to provide syariah-compliant insurance products in that country.
Anuar said although the company’s retakaful business would remain focused on Malaysia, being the world’s largest takaful player, it planned to expand its overseas business to 70% of its revenue in five years time.
The securing of ratings from renowned rating companies is an important tool for MNRB to penetrate territories that impose a minimum security rating for reinsurers. Malaysian Re last December was reaffirmed and awardedthe Insurer Financial Strength (IFS) rating of A (excellent) with a stable outlook by Fitch Ratings.
Its wholly-owned retakaful company - MNRB Retakaful, was awarded the IFS rating of BBB+ with a stable outlook from the same rating agency.
For the financial year ended March 31 (FY08), Takaful Ikhlas’ gross contribution improved significantly to RM427.5mil from RM223.9mil previously, surpassing the company’s initial target of RM320mil. Its net profit rose to RM11.4mil from RM1mil previously,
For FY08, MNRB posted a 31.6% jump in net profit to RM170.44mil, compared with RM129.47mil in FY07. Revenue rose 17% to RM978.6mil from RM834.1mil previously.
Source from: The Star, URL: