KUALA LUMPUR: Malaysia's biggest Islamic insurers plan to expand in Indonesia, taking advantage of industry growth that's almost three times the pace of their home market and increasing wealth in the world's most-populous Muslim country.
Mayban Ageas, the nation's largest insurer, is considering an acquisition in Indonesia, Chief Executive Officer Hans De Cuyper said in a March 6 interview.
Syarikat Takaful Malaysia Bhd., the second biggest, estimates its Indonesian unit will generate 50 percent of its profits, from less than 10 percent now, Managing Director Hassan Kamil told reporters in Kuala Lumpur on March 7, without giving a timeframe.
Indonesia's Muslim population of 213 million compares with 17 million in Malaysia, U.S. government data show.
Shariah-compliant insurance, known as takaful, rose 48 percent in Indonesia in 2010 to 4.5 trillion rupiah ($489 million), while Malaysia's market expanded 17 percent in the first seven months of last year to more than 10 times that size.
Indonesia has the equivalent of $7 billion of corporate Islamic bonds outstanding, compared with $76 billion for its Southeast Asian neighbor, according to data compiled by Bloomberg.
"Indonesia is a very hot market," said Kuala Lumpur-based Cuyper, whose company is the insurance unit of Malayan Banking Bhd., the nation's top lender. "The growth potential is significant."
Southeast Asia's biggest economy had five takaful companies in addition to 35 booths offering Shariah-compliant insurance at non-Islamic operators as of September, according to the Jakarta- based Indonesian Shariah Insurance Association.
Malaysia currently has 12 such insurers after the central bank issued four new licenses in 2010, while takaful assets totaled 16.6 billion ringgit ($5.4 billion) in July, the Finance Ministry's annual report issued in October showed.
Rising Incomes
Rising wealth in Indonesia makes the country an attractive destination for Malaysian insurers, amid increased domestic demand, Syed Moheeb Syed Kamarulzaman, chairman of the Malaysian Takaful Association in Kuala Lumpur, said in an e-mail March 9.
Indonesia's per capita gross domestic product increased an estimated 6.8 percent to $4,700 last year, according to U.S. government data. Muslims account for 86 percent of Indonesia's total population of 248 million and 60 percent of the 29 million people in Malaysia, the data show.
Takaful is based on the Koranic principle of mutual assistance, where policy holders contribute a sum of money to a common pool managed by the company. The funds are used to pay for claims and any excess is returned to customers. (Bloomberg/aph)
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