Munich Re sets up first foreign retakaful ops in Malaysia

The Star - Friday April 4, 2008

KUALA LUMPUR: Germany-based insurance company Munich Re Retakaful has set up the first foreign retakaful operation in Malaysia with a working capital of RM25mil.
Chief executive officer Dr Ludwig Stiftl said the group was currently in talks with eight companies in Malaysia to offer its general and family retakaful products.
“We will make Malaysia the hub for our global retakaful activities,” he said at the launch of its Malaysian office yesterday.
The company was also in talks with several parties from South-East Asia and Middle Eastern countries on its retakaful products, he added.
According to Stiftl, Malaysia is the world’s largest takaful market and the Government had plans to increase its market share to 20% by 2012 from the current 6.1%.
The global market value for Islamic insurance was expected to reach US$7.4bil by 2015, he said, and growth rates were expected to be double-digit over the next 10 years.
On the challenges to operate in Malaysia, he said the group needed to identify the types of business and its target markets as well as strategies to compete with conventional insurance companies.
“We would need another three to five years to build up our business relationships in the market as well as business models for the region,” he said, adding that the group would tailor-make its products to its clients.
Currently operating with a staff of five, Stiftl said the group would increase its manpower in Malaysia and leverage on its existing 38,000 employees in other countries.
Meanwhile, Bloomberg reported that Munich Re, the world’s second-biggest reinsurer, planned to control as much as 20% of the global market for Islamic reinsurance within five years by tapping economic growth in the Middle East and Asian Muslim nations.
Demand for retakaful would expand at least 10% a year and feed off an annual Islamic insurance market as big as US$3bil, it quoted Munich Re director Ludger Arnoldussen as saying in an interview. Kuala Lumpur will be the base for the division.

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