KUALA LUMPUR (July 29): Syarikat Takaful Malaysia Keluarga Bhd's (STMKB) share price pared gains in afternoon trading today after climbing as much as 47 sen or 10.49% to RM4.95 earlier following the Islamic insurer's announcement yesterday that it had signed new agreements with RHB Islamic Bank Bhd, allowing the latter to sell STMKB's products.

At 2.42pm today, STMKB shares pared gains to RM4.68 with 1.67 million units traded. At RM4.68, the company is valued at some RM3.87 billion.

Investors had today cheered news of the fresh five-year agreements, which offer continuity to the STMKB-RHB Islamic existing 10-year collaboration under their bancatakaful service arrangement.

However, the 10-year bancatakaful service arrangement, established since 2015, is scheduled to end this Friday (July 31) following RHB Islamic's decision to discontinue the scheme.

RHB Islamic is a wholly-owned subsidiary of RHB Bank Bhd.

On Jan 15, 2020, RHB Bank said in a Bursa Malaysia filing RHB Islamic had then notified STMKB of RHB Islamic's decision to discontinue the bancatakaful service arrangement in accordance with the terms of the bancatakaful service agreement between STMKB and RHB Islamic.

"With the discontinuance, the bancatakaful service arrangement will come to an end upon the expiry of the 5th anniversary of the bancatakaful service arrangement on July 31, 2020," RHB Bank said.

Yesterday, STMKB said in a Bursa filing the company and its wholly-owned subsidiary Syarikat Takaful Malaysia Am Bhd (STMAB) had respectively signed a family bancatakaful service agreement and general bancatakaful service agreement with RHB Islamic.

The five-year agreements commence this Saturday (Aug 1), according to STMKB.

"RHB Islamic shall sell, distribute, market and promote family credit takaful products of STMKB. In consideration thereof, STMKB will pay a facilitation fee of RM145 million to RHB Islamic.

"RHB Islamic shall sell, distribute, market and promote general takaful products of STMAB. In consideration thereof, STMAB will pay a facilitation fee of RM6 million to RHB Islamic," STMKB said.

Today, Hong Leong Investment Bank Bhd (HLIB) analyst Chan Jit Hoong wrote in a note that although the new agreements came at a heftier price tag at three times more for STMKB, it is a worthwhile investment for the company "since they (RHB Islamic) had generated circa RM200 million of gross earned contributions per annum for STMKB in the past".

Chan said HLIB raised its recommendation for STMKB shares to "buy" from "hold" with an unchanged target price of RM5.

"(Earnings forecast) unchanged as [the new agreements] were largely expected and quarterly financial reporting is just around the corner," the analyst said.