Malaysia’s Kurnia Asia Seeks Takaful License

Kurnia Asia Bhd. is looking for expansion into takaful, or Islam-based insurance business in Malaysia as it awaits a response from Bank Negara, the Malaysian central bank and financial regulator, to its application for a takaful license.

The group submitted an application for a takaful license in October 2009 to Bank Negara, which plans to release up to two new takaful licenses in Malaysia, said Rachel Ho of corporate finance at Kurnia Asia.

As Bank Negara granted five new banking licenses last week, Ho told BestWeek Asia/Pacific the announcement of a new takaful license is expected to come out soon.

Kurnia Asia, the holding company of Malaysia's largest nonlife insurer Kurnia Insurans (Malaysia) Bhd., has not yet taken part in takaful business. The Malaysian insurer has a subsidiary in Indonesia and an affiliate company in Thailand.

Pending a regulatory ruling on the takaful license, Kurnia Asia said it has nothing to disclose about further business plans or a potential partnership for a new takaful operation.

Malaysia's regulator plans to liberalize its financial sector by issuing nine new licenses for the insurance and banking sectors and allowing more foreign operations in these two sectors last year.

The nine new banking and insurance licenses to be issued between 2009 and 2011 include two for takaful, five for commercial banks and two for Islamic banks. The cap on foreign equity holdings for operators of conventional insurance, takaful, investment banks and Islamic banks will be lifted from 49% to 70% (BestWire, May 5, 2009).

Kurnia Insurans mainly offers motor insurance for retail and commercial sectors in Malaysia. Non-motor business accounts for 22% of its total business portfolio as of March 2010, up from 17% a year earlier.

Kurnia Asia reported a net profit of 23.81 million ringgit (US$7.4 million) for the first quarter of 2010 ended this March, down from 26.39 million ringgit a year earlier. The group achieved an increase of 160.9% in underwriting surplus to 10.76 million ringgit in this first quarter. It had total assets of 2.37 billion ringgit in March 2010, up from 2.35 billion ringgit in December 2009, according to Kurnia Asia's financial statement.

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