Foreign insurers eye stake in Syarikat Takaful

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Syarikat Takaful Malaysia Bhd, which is a target for acquisition, could see the entry of a foreign-based insurer buying up a stake in the country’s oldest takaful company.

BIMB Holdings Bhd, which owns 60% stake in Syarikat Takaful, according to sources has been approached by a couple of foreign insurers which have expressed interest in the acquisition of Syarikat Takaful, which is also one of the leading and stronger domestic takaful operators with a market value of about RM3.3bil.

BIMB, sources said, at the moment is mulling the right price for the sale of a stake in its listed takaful arm and how it can add value to the group and its shareholders amid the restructuring of the group.

The sale, a source said, may entail the disposal of the 60% stake or a part of it as the lender was in the midst of discussion as to how best the group can benefit from the disposal of Syarikat Takaful’s stake while complying with the regulations under the Financial Services Act (FSA) 2013 in terms of capital adequacy for a financial holding company.

He added that BIMB was closely scrutinising and weighing on the matter at the moment and some form of announcement could be made soon.

BIMB’s outgoing CEO Datuk Seri Zukri Samat during an AGM last Wednesday indicated that the group-wide restructuring move may entail the review of BIMB’s 60% stake in STMB and the transfer of the listing status to Bank Islam Malaysia Bhd, among others.

Bloomberg had earlier reported that the lender had reached out to banks to advise on its 60% holding in Syarikat Takaful and that it could pick an adviser as soon as this month.

For the first quarter ended March 31, 2017, Syarikat Takaful reported a higher net profit of RM56,8mil compared with RM46.6mil a year ago.

Revenue for the period stood at RM659.8mil against RM633.2mil previously.

The increase was attributable to higher sales generated by both family and general takaful businesses.

Syarikat Takaful is currently the market leader in the family takaful industry and has been the frontrunner for employee benefits products for the past few years.

One of the company’s strengths which has differentiated it from its competitors is the 15% no-claim cash back policy – the highest in the takaful industry.

The policy offers a 15% cashback payout to customers should they make no claims during the coverage period.

Meanwhile, on Syarikat Takaful’s latest corporate structure in view of the requirement for the splitting of licences under the Islamic Financial Services Act (IFSA) 2013 for family and general insurance businesses and whether it would impact earnings, group managing director Datuk Seri Mohamed Hassan Kamil told StarBiz that it had submitted the corporate structure requirements to Bank Negara December last year.

“The central bank is in the process of reviewing the company’s application.

“Under the IFSA requirements, the separation of licenses should take place by July 2018.

“The actual time frame to split the licences of the two businesses would depend on the necessary approvals from the central bank and Ministry of Finance.

“The splitting of licences will have minimal impact on 2017 earnings due to some expenses related to the preparation for the splitting exercise.

“We do not expect the company earnings to be affected until the actual splitting of licences is completed.

“If the approvals are granted, we anticipate the actual splitting of licences to be completed in 2018.”

The penetration rate of conventional and family takaful in the country last year stood at about 55%, of which conventional was close to 40% and family takaful at about 15%.

Source: The Star (22 May 2017)