This article first appeared in The Edge Malaysia Weekly on September 7, 2026 - September 13, 2026

SYARIKAT Takaful Malaysia Keluarga Bhd (KL:TAKAFUL) is stepping up its push into retail takaful as part of a strategy to sustain earnings growth over the next few years, seeking to build a bigger customer base while keeping its higher margin credit-related business as the backbone of its earnings.

In an interview with The Edge, group CEO Nor Azman Zainal says the takaful operator aims to make greater use of its bancatakaful partnerships and digital platform Kaotim to reach individual customers, particularly those in their 20s to 40s and the middle-income segment.

The strategy marks a shift in emphasis for the group, which has long been a major player in the credit-related takaful market — a business that generates higher margins and more predictable claims — in which it commands about 35% market share.

Takaful Malaysia is the country’s largest operator of family takaful — the Islamic equivalent of life insurance — and second-largest general takaful provider.

“We have to penetrate the retail market further,” Nor Azman says of Takaful Malaysia’s five-year vision, adding that the group had not fully capitalised on its bancatakaful relations to sell retail products previously.

“We have been accelerating this line of business, and we see it as the future. At the same time, we continue to maintain our credit-related business, which remains our long-term profit generator.”

The strategy is gaining traction, as Takaful Malaysia’s retail market share has risen sharply from just 0.8% in 2022 to about 9% as at end-June this year, he says, citing Insurance Services Malaysia (ISM) data. ISM is the industry statistics body.

The group wants to build on that momentum without taking on the heavy costs associated with an agency force. Instead, it is relying on banks and Kaotim, its direct-to-consumer digital platform.

Launched in late 2023, Kaotim is less than three years old but already has “tens of thousands” of customers, Nor Azman says. He declines to be specific about the platform’s number of customers, citing competition concerns.

Takaful Malaysia is aiming for Kaotim and direct-to-consumer business to account for 20% of group revenue within five years, from less than 10% currently, he says.

Its ambition is considerably larger in terms of customers.

“I should target more than a million customers,” Nor Azman says, adding that the group would need to invest more to scale the business.

Opportunities in the retail takaful market are “abundant”, he observes. “Growing demand for financial planning, wealth management and retirement products are all areas where we see opportunities. The question is how we position ourselves in those spaces.”

The group is particularly keen to grow protection products such as life and critical illness coverage, which offer better margins than savings products.

Takaful Malaysia does not expect retail takaful margins to match those of its credit business, but sees greater volume as the way to build profitability over time.

Among its top-selling retail offerings are savings products via the banks, and medical cards and legacy protection via Kaotim.

In recent years, the industry’s retail segment has come under pressure amid rising medical inflation. Medical products were a major driver of Malaysia’s family takaful market as multinational insurers expanded their retail businesses in the mid-2000s, but rising medical claims have since become a challenge.

According to Nor Azman, Takaful Malaysia has limited exposure to individual medical products, which account for less than 5% of sales in its family takaful business. Its employee benefits (EB) medical business is priced annually, allowing the company to adjust premiums based on the latest claims experience.

The group entered the EB market only in 2022 and has benefited from pricing based on more recent medical claims data, he says. “We are not making losses. Our EB business is healthy.”

Takaful Malaysia is one of six players involved in the Klang Valley pilot of MediAsas, an industry initiative aimed at addressing rising medical costs and claims, that is reportedly to be rolled out nationwide in January 2027.

According to Nor Azman, Takaful Malaysia’s sales continue to grow at double-digit rates in both its family and general takaful businesses, despite a slower pace of reported earnings growth in recent years following the introduction of the MFRS 17 accounting standard in 2023.

The group’s cumulative contractual service margin, or CSM, stood at about RM1.5 billion as at end-June. Under MFRS 17, the CSM represents future profits from insurance and takaful contracts that are yet to be recognised in earnings.

The bulk of Takaful Malaysia’s CSM comes from its credit-related business, providing what Nor Azman describes as a relatively dependable pool of future profit. Credit-related claims have historically been stable, while new business generated through the group’s bank partnerships adds to the CSM that can be released over time.

“The bulk of our CSM comes from the credit business, which makes it more stable,” he says.

Takaful Malaysia has 17 bancatakaful partners comprising banking institutions, six of which are preferred partnerships and under which its products are given priority, he says. These relationships are important to the credit business because customers taking Islamic housing, car and personal financing typically require takaful coverage.

Some analysts have raised concerns that Takaful Malaysia could be affected by Bank Kerjasama Rakyat Malaysia Bhd’s (Bank Rakyat) planned RM1.64 billion acquisition of MNRB Holdings Bhd’s (KL:MNRB) takaful businesses. This is because Bank Rakyat currently has a preferred bancatakaful partnership with Takaful Malaysia.

“Bank Rakyat is still with us. We understand the concerns, but we are also looking at various other opportunities,” Nor Azman says without elaborating, when asked about the matter.

Meanwhile, Takaful Malaysia is also seeking to strengthen its general takaful business, particularly non-motor segments such as fire and personal accident, which it sees as more profitable than motor coverage.

The group deliberately limits motor to no more than 60% of its general takaful portfolio because of its higher risk and capital requirements. As at end-June, motor accounted for 58% of its general takaful portfolio and non-motor 42%.

Takaful Malaysia is exploring acquisition opportunities as it looks to accelerate growth, with the group open to deals in both family and general takaful. In general takaful, the group is particularly interested in opportunities that could strengthen its presence in profitable non-motor segments.

“We keep looking for opportunities to grow. And inorganic growth is one of our key strategies, if the value is right,” Nor Azman says.

He emphasises that any acquisition would have to be priced appropriately and add value for shareholders. Distribution capabilities would be a key consideration in assessing potential targets.

Takaful Malaysia was among parties understood to have expressed interest in MNRB’s takaful businesses.

Last month, Takaful Malaysia reported a 6% year-on-year (y-o-y) rise in 2QFY2026 profit after zakat and tax (PAZT) to RM88.83 million. Quarter on quarter, though, PAZT was down 12% mainly because of higher claims and operating expenses associated with increased business growth.

For the six months to date, PAZT rose 6.4% y-o-y to RM189.81 million, coming in within analyst expectations, at about 48% of a consensus full-year forecast. Its takaful revenue increased 7.5% to RM1.99 billion, which included a CSM release of RM148.6 million.

Family takaful revenue for the six months rose 5.7% to RM1.16 billion, driven mainly by higher contribution releases from the EB segment; while general takaful revenue increased 16.1% to RM806.7 million, mainly because of higher contributions charged in the motor segment.

Nor Azman is optimistic that full-year earnings will continue to grow, although he declined to provide a specific target. Last year, PAZT grew 2.1% to RM386.1 million.

Bloomberg data shows that of eight analysts that track Takaful Malaysia, six have a “buy” call while two are calling “hold”. The average 12-month target price was RM4.27, which suggests further upside from last Friday’s (Sept 4) closing price of RM3.09. At that price, Takaful Malaysia’s market value was RM2.7 billion.

The stock had gained 14.8% this year to hit a closing high of RM3.56 on May 19 before losing steam. Year to date, it is down 0.3%.

Takaful Malaysia’s biggest shareholders are Lembaga Tabung Haji with a 30.08% stake, the Employees Provident Fund with 18.03% and Kumpulan Wang Persaraan (Diperbadankan) (KWAP) with 7.01%. 

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