European firms keen on Takaful Malaysia (December 6, 2007)

KUALA LUMPUR: Two Europe-based multinational corporations (MNCs) with local conventional insurance units have emerged as potential suitors for a stake in Syarikat Takaful Malaysia Bhd (Takaful Malaysia).

This was in addition to the two Middle East groups that had already commenced negotiations with Takaful Malaysia, said group managing director Datuk Mohamed Hassan Md Kamil.

“We are still open to other interested parties. In fact, one or two other multinationals are also interested in talking to us through our merchant banks.
“So, we hope to receive all the proposals that will be presented to the board for evaluation,” he told reporters after the company's AGM yesterday.
Takaful Malaysia hopes the new investor would help it expand abroad as it leveraged on the foreign partner's expertise.

On potential markets, the company was looking to penetrate the Middle East through its international currency business unit (ICBU).

Hassan said it hoped to sell non-ringgit products, mainly investment-oriented products, to the Middle East through the new partner as well as expand and capture the increasing potential in the retakaful segment.

“We are in the midst of putting together a US dollar (denominated) product. We expect to launch the first product – with a fund size of US$100mil – in February.
“Once the ICBU is up and running, it is expected to contribute a large proportion to the company's turnover. We are looking at overseas contribution of between 20% and 25% for the financial year ending June 30, 2008, primarily from the ICBU,” he said.
Takaful Malaysia first obtained Bank Negara approval to begin talks with Abu Dhabi-Kuwait-Malaysia Strategic Investment Corp in early October as a potential strategic investor. Late last month, it received consent to start negotiations with Islamic Arab Insurance Co PJSC (Salama).

Hassan said Takaful Malaysia was willing to part with up to 49% stake in the group, including reinsurance arm Asean Retakaful International (L) Ltd, Indonesian subsidiary PT Syarikat Takaful Indonesia and the company itself. As active discussion was already in progress between the Middle East parties and Takaful Malaysia's merchant bank, he was hopeful a deal could be sealed by year-end.

“If the pricing and everything else is favourable, I hope we can agree on a price by the end of December,” he said.

Although the identity of the two European MNCs were not immediately known, foreign insurance players had acknowledged the importance and potential of having a takaful business.

In July, it was reported that Allianz AG did not rule out venturing into the local takaful market after it had successfully established the business in Indonesia.

http://thestar.com.my/news/story.asp?file=/2007/12/6/business/19678422&sec=business