Friends Life to Roll Out Malaysian Takaful Joint Venture in 1Q 2012

Friends Life FPL Ltd., a pension, life and investment company based in the United Kingdom, said it has signed a shareholders' agreement with AMAB Holdings, a wholly owned subsidiary of AmBank Group, in connection with a takaful joint venture it plans to roll out in Malaysia.

AmFamily Takaful Bhd., the takaful joint venture in which Friends Life holds a 30% stake, plans to launch in the first quarter of 2012. AmFamily Takaful will offer three major products lines: protection, investment-linked savings and pensions, said Richard Duxbury, international strategic development director at Friends Life.

Initial paid-up capital of AmFamily Takaful will be 100 million ringgit (US$31.4 million), of which Friends Life will contribute 30 million ringgit in cash with the remaining from AmBank Group. "This is an exciting development and positions us well to participate in the ongoing growth in the Asia region," said John Van Der Wielen, managing director international at Friends Life, in a statement.

Friends Life has "significant takaful knowledge developed over many years operating with key partners in the Middle East," said Duxbury. This knowledge, together with the insurer's distribution and governance skills, will be of benefit to the start up company, he said.

"In time, Friends Life will also be looking to assist AmFamily Takaful with its overseas expansion," said Duxbury. Friends Life is a subsidiary of London-listed financial group Resolution Ltd.Friends Provident International</org>, part of Friends Life Group, provides life, pension and investment products in Asia, the Middle East and the United Kingdom, with offices in Hong Kong, Singapore, Dubai and the Isle of Man.

Malaysia is a fast-growing market for both conventional and takaful products, with low penetration in both segments. Duxbury said the market is well regulated, has a sound economic climate and attractive demographic for both conventional and takaful markets.

The takaful partnership with AmBank Group will benefit from the group's strong bancassurance and client base in Malaysia. AmG Family Takaful will distribute through AmBank Group's retail banks and other subsidiary banks, together with a focused agency sales network, according to Duxbury.

Friends Life's takaful venture with AmBank Group is among the four new family takaful licenses granted by Bank Negara Malaysia, the country's central bank and regulator, in 2010. The other three licenses were given to joint ventures led by ING Groep NV, Great Easter Life Assurance Co. Ltd. and American International Assurance Bhd. (Best's News Service, Sept. 2, 2010).

AIA AFG Takaful, Great Eastern Takaful and ING Public Takaful Ehsan were all launched in the past year. With the new licenses, Malaysia's takaful penetration is expected to reach 18% by 2013. Family takaful grew 28% annually over the past five years, representing 80% of the total takaful market in Malaysia (Best's News Service, Nov. 22, 2011). Net contributions from family takaful amounted 3.4 billion ringgit in 2010, up from 2.7 billion ringgit in 2009, according to Bank Negara.

The regulator's strategic intent for Malaysia to be a world class and leading Islamic finance center is also a key factor driving takaful business potential, according to Duxbury. In Malaysia, Friends Life already has a life joint venture with AmBank Group, with a 30% stake in AmLife Insurance Bhd.

(By Iris Lai, Hong Kong bureau manager: [email protected])