KUALA LUMPUR: Syarikat Takaful Malaysia Bhd expects a record performance for its financial year ending Dec 31, 2015 (FY15), driven by its robust employee benefits business.

Datuk Seri Mohamed Hassan Kamil, group managing director of Takaful Malaysia (fundamental: 0.95; valuation: 1.5), said the group performed well in the first quarter of 2015 (1Q15).

“Based on our first quarter performance, which will be announced before the end of May, we think FY15 will be another record year for Takaful Malaysia,” Mohamed Hassan told a press conference held in conjunction with the group’s annual and extraordinary general meetings yesterday.

He highlighted that the Islamic insurer managed to secure a few major clients in the first quarter, especially for its employee benefits business, where premiums average in the millions per customer.

Moreover, Takaful Malaysia has also noted a shift, as companies convert their conventional insurance to takaful, which will augur well for the group and the Islamic insurance industry.

“Looking at events in the recent months, I believe this year will be a good year for Takaful Malaysia,” said Mohamed Hassan, adding that the group expects to exceed the industry growth rate, which is in the low teens.

Going forward, Takaful Malaysia said there could be some opportunities for mergers and acquisitions (M&A), due to an expected restructuring of the takaful industry, following the implementation of the Islamic Financial Services Act 2013.

“With the Act that has come into play, all composite insurance and takaful operators are required to split their company into family and general segments.

“With the restructuring taking place, we anticipate some opportunities for M&As. We’ll see if there will be any good opportunities for us,” he said, adding that the group will be eyeing local acquisition targets in 2017.

For its Indonesian operations, which contribute to less than 5% of the group’s earnings, Mohamed Hassan said Takaful Malaysia is not competing on a level playing field, as it is competing with window takaful operations in the country.

“Previously, the government of Indonesia told us that the window takaful concept will cease in 2018, with the takaful companies to be capitalised and stand-alone. But two months ago, they made another announcement that the window concept will continue for the next 10 years,” he said.

Meanwhile, the group is still engaged in discussions with Bank Muamalat Indonesia, which owns a 6% stake in Takaful Malaysia’s 56%-owned PT Syarikat Takaful Indonesia, to form a partnership for the group to distribute its products through the bank.

“With the window concept being extended, it has somewhat put a damper on our initiative, but we have always been engaging with Bank Muamalat. So there is no timeline per se for that,” Mohamed Hassan explained.

Besides Indonesia, Takaful Malaysia is also considering to expand into the Middle East, but is adopting a wait-and-see approach due to the volatile political climate there.

For now however, Mohamed Hassan said Takaful Malaysia’s focus is on the Asean region.

This article first appeared in The Edge Financial Daily, on May 13, 2015.