“Last year our profitability was impacted by some of the investments made in China by our Singapore operations. Those have been disposed of and the investments pivoted to the right markets…” — Chris Eng Poh Yoon, Etiqa’s chief strategy officer
KUALA LUMPUR (Dec 13): Malayan Banking Bhd’s insurance and takaful arm Etiqa Insurance and Takaful remains on track for a “strong rebound” this year, with gross written premiums (GWPs) projected to reach a new record after a blip in 2022, its group chief executive officer Kamaludin Ahmad said.
This was despite Etiqa posting lower GWPs of RM5.5 billion in the first half of the year ended June 30, 2023 (1H2023) — down 6.8% from RM5.9 billion a year earlier.
Kamaludin said for full year 2023, the group is expecting to achieve record top line (GWPs) as its performance in 2H2023 is likely to be stronger than in 2H2022.
Etiqa, which operates in Malaysia, Singapore, the Philippines, Indonesia and Cambodia, saw total GWPs dip 3.3% to RM11.09 billion last year, from RM11.47 billion in 2021. In March this year, Kamaludin told The Edge weekly in an interview that the group expects a strong rebound this year, with GWPs likely to grow by more than 10%.
“As for our bottom line, it would be a recovery year...a rebound from the issues that we faced last year,” its chief strategy officer Chris Eng Poh Yoon told The Edge after Etiqa’s media luncheon 2023 here on Wednesday.
Profit before tax (PBT) for 2022 contracted 48% to RM472 million, from RM907.6 million in 2021, dragged down by its operations in Singapore, which suffered from volatile investment market conditions that year. However, Etiqa has seen profit returning to normal this year after it booked a PBT of RM503.9 million in 1H2023 — surpassing the whole of last year.
“Last year our profitability was impacted by some of the investments made in China by our Singapore operations. Those have been disposed of and the investments pivoted to the right markets. We still have some holdings in China. These are assets (stocks and bonds) held by our fund managers for Etiqa Singapore. But our operating entities in Malaysia have been doing well all this while,” Eng said.
He also said as the Malaysian economy is expected to grow in 2024, the insurance industry is also forecast to do well.
“There’s a lot of excitement in the infrastructure and green energy space, which offer opportunities for corporate insurance. Etiqa, as the largest corporate insurance company in Malaysia, should naturally do well.”
But global macroeconomic trends, such as increases in US interest rates, might pose challenges next year, he said, as they could drive a selldown in markets, which in turn would dampen interest in investment-linked policies and impact life insurance sales.
To enter the Philippines, Singapore takaful markets
During a presentation earlier, Eng said Etiqa, which holds the pole position in the general insurance and Islamic insurance/takaful market in Malaysia with a 16% share, is set to enter the takaful markets in the Philippines and Singapore in the first half of 2024.
The group is now in discussion with regulators in the two countries to potentially bring its takaful expertise there.
“It is still a journey, the takaful products have yet to be launched, but we have been advising the local regulators there as well as our operating entities in the two countries on this potential,” he said.
In January 2022, the Insurance Commission of the Philippines issued the baseline regulatory framework for takaful undertakings, permitting insurers to explore takaful windows. But currently, there is no established takaful or retakaful market in the Philippines.
Eng noted that Muslims account for 6% of the Philippines’ population of 109 million, with 93% of them in Mindanao.
“We are looking at how we can meet the needs of the Muslims in the Philippines. The Insurance Commission of the Philippines has been very encouraging towards the launch of some simple general takaful products (that will take place) in the coming months. We are also advising them on establishing a regulatory framework for takaful operators,” he said.
As for Singapore, Eng said Etiqa is exploring the reintroduction of takaful offerings there. “Our plan is to initially launch a family takaful product and gradually introduce other takaful products based on market demands,” he said, adding that Muslims account for 15.6% of the city state's population.
“In Indonesia, we currently do only general insurance as you need a separate shariah licence to offer takaful products there, unlike the Philippines and Singapore. For that, we are always on the lookout for potential licences. But there is nothing concrete,” he added.