Takaful Ikhlas unfazed by competition

The Star Malaysia    Tuesday March 2, 2010        By EUGENE MAHALINGAM

KUALA LUMPUR: Takaful Ikhlas Sdn Bhd, the Islamic insurance arm of MNRB Holdings Bhd, is unfazed by new competition from potential takaful players that wish to enter the industry.

"For us, competition drives us or brings innovation," president and chief executive officer Syed Moheeb Syed Kamarulzaman said after the launch of its corporate head office in Bangsar South yesterday.

Syed Moheeb was speaking in response to the Government's financial sector liberalisation plan that was announced last year, which included the issuance of licences for seven banking and two takaful players from 2009 until 2011.

"We have always built our reputation and business based on quality service. That is one area that we think would be difficult for a new operator to come in and attain quickly. We're quite confident that we've built the infrastructure to ensure consistent high service level. The new players will push us and make us strive harder to introduce innovative products into the market," Syed Moheeb said.

Chairman Sharkawi Alis acknowledged in his speech that the Islamic insurance firm would have to brace for tougher competition with the introduction of more players.

"When we started in 2003, there were only four takaful operators in the country. Today, we have eight with two more players coming on stream soon. With more players, competition for market share will become stiffer."

He, however, said the takaful industry had good growth potential.

"On the plus side, the takaful industry is growing, not only in Malaysia but worldwide," Sharkawi said, adding that the global takaful industry was projected to reach US$7.7bil by end-2012.

According to Sharkawi, Malaysia – which is the world's second largest takaful market – recorded a gross contribution of RM3.5bil in 2009 and is expected to hit RM5.5bil by end-2013.

Takaful Ikhlas raked in RM580mil in gross contributions for its financial year ended March 31, 2009 (FY09). It is targeting to record RM625mil in contributions for FY10.

On its new head office, the company invested RM87mil in two tower blocks covering a total built-up area of 99,286 sq ft. A further RM10mil was spent on renovations. The launch was officiated by Deputy Finance Minister Datuk Dr Awang Adek Awang Hussin.

On a recent report that the Prime Minister was eyeing 5% to 6% gross domestic product (GDP) growth for 2010, Dr Awang Adek said: "It would be a fantastic number if we can get 6%.

"If you look at the current economic scenario, it looks like the world and the Malaysian economy is improving. Our fourth quarter (GDP) results also were better than expected."

The GDP expanded 4.5% in the fourth quarter after three consecutive quarters of contractions. For the full year, the Malaysian economy contracted by 1.7%.