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Friday, 24 July 2015

Malaysia: Maybank Ageas aims equal contribution from takaful, general insurance

KUALA LUMPUR: Maybank Ageas Holdings Bhd, the parent company of Etiqa Insurance Bhd and Etiqa Takaful Bhd, aims to equalise the contribution from its general insurance business and that of life insurance and family takaful for the financial year ending Dec 31, 2015. 
The target would be supported by the company's new distribution channels and and plans to be more aggressive on the fire thrust of its general insurance business, said Chief Executive Officer Kamaludin Ahmad.
"We want to have a good growth in fire insurance. In addition, we are going to sell term takaful cover which is suitable for the younger generation, as well as, provide house owner insurance on our online channel.
"The challenge we are facing now is in the motor insurance sector. It has always been a challenge in the market. We will probably break even in the motor insurance," he told Bernama.
For its life insurance and family takaful, Kamaludin said Maybank Ageas has been consistent in upgrading products for medical care and was proactive in its claims servicing. 
Maybank Ageas recorded a premium of about RM5 billion last year, of which RM2.55 billion came from life and family insurance and the remaining RM2.45 billion came from general insurance. 
With its plans this year, Kamaludin said Maybank Ageas aimed to increase the number of policyholders by 50,000 new customers and at least 70,000 policies from its existing customers. 
To date, it has 3.9 million policyholders owning a cumulative 5.8 million policies. 
On overall performance, Kamaludin said the Maybank's insurance and takaful arm aimed to increase total premium by at least 10 per cent in the current financial year, driven by its life insurance, takaful business, as well as, contributions from its Singapore subsidiary. 
As at end-June 2015, Etiqa Insurance Pte Ltd's life insurance annual premium equivalent stood at SG$22.8 million (SG$1=RM2.80) against a full year target of SG$60 million. 
For general insurance, the year-to-date gross written premium is at SG$26.8 million against a full year target of SG$59.1 million.
(The Star Online / 23 July 2015)
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Malaysia: RM38bil in sukuk planned for this year

PETALING JAYA: Malaysia has more than RM38bil of sukuk issuances in the pipeline dominated by the private sector.
Data recently compiled and updated by Reuters showed that Tenaga Nasional Bhd has hired three banks to help raise up to RM9.5bil through a sukuk issue.
It is raising the amount to develop a greenfield power plant it has taken over from debt-laden state fund 1Malaysia Development Bhd.
Another notable corporate issuer was SapuraKencana Petroleum Bhd.
It said said in mid-June that it planned to raise up to RM7bil with a multi-currency sukuk programme.
Meanwhile, the country’s second largest lender, CIMB Group Holdings Bhd wants to launch a new RM6bil conventional and Islamic bond programme, a regulatory filing by RAM Ratings said in late April.
Telekom Malaysia Bhd had readied in late April a RM2.8bil, multi-currency sukuk programme. Another prominent issuer was Axis REIT.
It said in early April that it had expanded its sukuk programme to RM3bil from RM300mil.It had extended the tenure to perpetual from 15 years.
Reuters news report yesterday said the Thomson Reuters Global Sukuk Index was at 118.01254 points, up from 117.85307 at the end of last month and 115.79726 at the end of last year.
(The Star Online / 22 July 2015)
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Islamic Finance System In Turkey

The Islamic finance system has arisen due to various religious and economical reasons and, in general, it is a system where any and all kinds of financial activities and transactions are applied within the scope of Islamic rules. This market is established based on applying the principles and rules brought in by Islam to the financial transactions. Considered as an alternative field to the modern finance understanding, the Islamic finance quickly develops as an alternative field in the global finance markets in the light of the developments during the recent years. The framework of an Islamic financial system is being established in line with various rules and laws which the Islamic communities are subjected to in terms of economical, social, political and cultural aspects.

The basic difference of Islamic finance and traditional finance is that the "interest", located in the center of the traditional financial transactions, is prohibited in the Islamic finance. If the money paid for the debt instrument is different than its nominal value, then the difference between them is described as interest. The Islamic religion considers this difference as an unfair increase, therefore prohibits the trading of any debt instrument for a value other than its nominal value. With the interest prohibition in question, it's aimed to prevent any unfair capital increase at a loss of someone else. In addition to this, only partnering for profit without taking any risk and without partnering to loss is also a prohibited transaction in the Islamic world. Debt instruments issued without taking the abovementioned into account are not accepted as an Islamic debt instrument.

For the Islamic law, the provisions of the agreement should be definite for the legal transactions and particularly for the agreements putting both parties under an obligation. In other words, the subject matter of the agreement should be known and definite. Particularly the agreements with substantial uncertainties are not considered as suitable for sharia.

According to the Islamic rules, the activities based on making a gain from the loss of someone else such asgamblingbetting and games of chance are also prohibited.

Within this scope, the financing methods developed by the Islamic financial institutions can be categorized in general as Mudaraba (labor capital partnership), Musharaka (profit-loss partnership), Murabaha (cost plus profit margin sales), Ijara (lease financing), Quard-Hasan (interest-free loan), Istisna'a (order based procurement) and Sukuk.

As one of these financing methods, Sukuk is an important financial instrument suitable to the interest-freebanking principles developed for increasing the financing in the international capital markets. The basic rule in Sukuk is that it has to be based on an asset different than the traditional debt instrument bonds. In the simplest term, Sukuk shows owning an asset or benefiting from that asset. According to this system, the main company assigns the properties subject to the Sukuk transaction to a company established for a special purpose, and this company securitizes and sells these assets to the investors. In the Sukuk system, the receivables are securitized based on the asset. As a result, it allows the buyer to get a share from the revenues obtained from the assets, in addition to the proceeds arising from the sales of the assets. Sukuk has become a global investment instrument and also defined as "interest-free bond". The Turkey version of Sukuk has entered to our legislation as lease certificates as a similar instrument and is regulated in the "Communiqué on Lease Certificates" no. III-61.1 (Communiqué) of the Capital Markets Board of Turkey. Lease certificate means thesecurity which is issued by the asset leasing company in order to provide financing to any kind of asset and right and allowing the lease certificate holders to be entitled for the revenues obtained from this asset or right, in the rate of their shares.

Carried out within the scope of the abovementioned rules and principles, the operation of the Islamic financial services and products vary from country to country, and recorded a significant improvement during the recent years. Examining and considering the other examples in the world, the Islamic financial system appears as an effective system in the fund transfer process as an alternative financial brokerage.

(Mondaq News Alerts / 22 July 2015)
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