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www.islamicfi nancenews.com<br />
<strong>Islamic</strong> <strong>Finance</strong> news Guide 2008<br />
2007 Global Takaful Review: Evolving Trends, Opportunities and<br />
Challenges (<strong>continued</strong>...)<br />
VHV, a general insurer in Germany; the balance is held by the<br />
public by way of an initial public offering.<br />
Recent strategic alliances include Prudential UK and Bank<br />
AlJazira. The memorandum of understanding signed by the<br />
two parties allows Prudential to take a signifi cant equity stake,<br />
thereby becoming the largest individual shareholder in a new<br />
venture that will acquire the market-leading Takaful Ta’awuni<br />
life insurance business of Bank AlJazira. The new Takaful<br />
Ta’awuni life insurance operation will be listed on the Saudi<br />
Arabian stock exchange (the Tadawul). Prudential will also<br />
take an equity stake in Bank AlJazira’s new fund management<br />
business, subject to regulatory approvals.<br />
“The growth of Takaful has also<br />
been aided by Shariah compliant<br />
home fi nance solutions”<br />
In Kuwait, annual insurance premiums are growing by 12%<br />
to 15%, equivalent to KWD150 million (US$519 million),<br />
aided by the increase in local development projects. Dr Ali Al-<br />
Bahr, director-general of the Kuwait Insurance Company, says<br />
Takaful accounts for 10% to 15% of the total market, despite<br />
Takaful being a relatively young sector.<br />
In Bahrain, the establishment of Allianz Takaful Bahrain will<br />
serve as the group’s global Takaful hub. Allianz Takaful will<br />
undertake family Takaful, while also focusing on investmentlinked<br />
insurance, life and health insurance.<br />
The Central Bank of Bahrain’s (CBB) license to Allianz is the<br />
third to be issued to foreign Takaful and reTakaful insurers — the<br />
previous two went to American International Group (AIG) Takaful<br />
and ACE group. CBB also approved the establishment of the<br />
US$20 million Aman Bahrain Insurance Company (ABIC), whose<br />
shareholders include Al Salam Bank, Aman and other investors.<br />
The growth of Takaful has also been aided by Shariah<br />
compliant home fi nance solutions. For example, Solidarity<br />
in Bahrain is the sole provider of Takaful home fi nancing<br />
protection and family protection products for Sakana Holistic<br />
housing solutions’ mortgage fi nance customers. Solidarity’s<br />
SolidFoundation Takaful policy will pay outstanding mortgage<br />
repayments and award the property to Sakana homeowners’<br />
families in the event of death.<br />
Customers can also access optional Takaful protection<br />
benefi ts such as critical illness and total permanent disability.<br />
Solidarity’s general Takaful business will also provide<br />
Sakana’s mortgage customers with property, fi re and allied<br />
perils cover to compensate for any loss of property in the<br />
event of damage.<br />
Pakistan<br />
In Pakistan, the Securities Exchange Commission of Pakistan<br />
introduced a comprehensive Takaful regulatory framework in<br />
2005.<br />
Qatar <strong>Islamic</strong> Insurance Company, Qatar <strong>Islamic</strong> Bank, Qatar<br />
International <strong>Islamic</strong> Bank, Qatar National Bank and the<br />
Amwal group together with Pakistani nationals (residents and<br />
non-residents) recently established the Pak-Qatar General<br />
Takaful Company and the Pak Qatar Family Takaful Company<br />
in Pakistan.<br />
The Pak-Qatar General Takaful Company has an initial paid-up<br />
capital of PKR250 million (US$4 million), while the Pak-Qatar<br />
Family Takaful Company will have a capital base of PKR400<br />
million (US$6.35 million). The Pak-Qatar Family Takaful<br />
Company has entered into a cooperation agreement with<br />
FWU Group in Germany. It will offer investment and protection<br />
products, savings products, and retirement and education<br />
policies.<br />
The Pak-Qatar General Takaful Company will offer specialized<br />
products covering accident, fi re, marine, engineering, money<br />
and banking, property insurance and liability.<br />
Asia-Pacifi c<br />
• Malaysia<br />
According to Bank Negara Malaysia’s (BNM) 2006<br />
report, new life business premiums and family Takaful<br />
contributions posted a growth of 13.5%. Growth was driven<br />
primarily by investment-linked business, which expanded at<br />
an impressive annual rate of 89% to offset the decline in<br />
ordinary life business. At the end of 2006, investment-linked<br />
products accounted for more than 40% of new business.<br />
In terms of distribution channels, new premiums garnered<br />
through bancassurance tie-ups accounted for a higher<br />
share of 44.2% while the market share of agency business<br />
declined to 44.8% in 2006.<br />
According to the same report, the Takaful industry <strong>continued</strong><br />
to record a strong performance in 2006. Total assets grew<br />
by 17.9% to account for 6.1% of total assets of the insurance<br />
industry, while combined Takaful contributions rose to 6.5%<br />
of the total premiums of the industry. In the family Takaful<br />
<strong>continued</strong>...<br />
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