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THE TAKAFUL AND RE-TAKAFUL INDUSTRY

Although the Takaful industry has seen double digit growth since 2010 according to reports, it still suffers from a lack of penetration in supposedly vibrant markets, and is still performing at what is considered to be lackluster levels. Saudi Arabia remains by far the largest Takaful market, contributing US$4.3 billion or 51.8% of the industry at an average contribution per operator of US$141 million. Malaysia, considered one of the largest markets in the Islamic capital market space, grew 24% to reach contributions of US$1.4 billion at an average contribution per operator of US$141 million. The UAE, with contributions of US$818 million, has charted a growth rate of 28%; whilst Sudan, which is considered to be the most significant market outside of the GCC and Southeast Asia, has seen more than 7% growth since 2010, with contributions totalling US$363 million.

Many within the industry have admitted to a gamut of issues which need to be addressed urgently and effectively in order to allow the industry to perform at its best; particularly in the investment space, where Takaful companies are suffering from a dearth of long-term investment opportunities to suit their risk and investment profiles. Another issue stems from the lack of risk-based capital, where there is a mismatch between the companies’ assets and liabilities, and the universal issue of lack of talent and understanding of Shariah based insurance products.

And although the global credit crisis has contributed to the slow-down in the growth of the Takaful industry, with lower returns all round for shareholders and Takaful policyholders and slower business growth on the back of a contracting economy, there is still much untapped potential in the re-Takaful sector, which has on the contrary seen new players entering the market due to the lower entry cost for re-Takaful operators, and the ability to write business on a global scale.

In this issue of Islamic Finance news Supplements, we take a closer look at the fundamentals of the Takaful industry, its issues from a macro and micro perspective, and what needs to be done to mitigate these problems in order to prevent a stagnation of growth within a sector which is ultimately brimming with potential.

 

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CONTENTS
 
 
Latest Issue
Wednesday 17th September 2014
Volume 11 Issue 37
   
Cover Story
IFN Rapid
News Briefs
Asset Management
Takaful
Ratings
Moves
IFN Reports
  IFN Global makes a splash in the Middle East
  FAA to launch ‘first of its kind’ standard for Islamic finance in 2015
  Turkey going strong — with or without Bank Asya
  Muslim expat estate planning: A new market for wealth management?
  IFN Global Trendswatch
  IFN Funds Round-up: Islamic funds index outperforms
  Weekly Poll: Following IILM''s recent six-month Sukuk issuance, which would be the most preferable tenor for liquidity management?
  Fund Focus: AlKhair Capital diversifies portfolio with debut Sukuk Plus Fund
  A new kind of rating?
  Two in a day — Sovereign Sukuk market welcomes Hong Kong and Sharjah
  Malaysian tripartite merger: A force that could trigger mergers in the domestic market?
  Takaful continues growth story — but not without struggle
  Sovereign Sukuk: Oman and South Africa inch closer to their Sukuk debut
IFN Country Correspondents
  Large-scale projects providing impetus for Islamic finance
  New PPP law stimulates Shariah involvement
  UAE and Iraq hold meeting to discuss Islamic economy opportunities
  Tax and Sukuk: Uncertainty looms
IFN Sector Correspondents
  Project finance: Meeting commercial demand with retail structures
IFN Country Analysis
  Islamic finance: Offering faith and progress for Nigeria?
IFN Sector Analysis
  Looking towards an encouraging close for 2014
Features
  The legal and structural framework for the issuance of Sukuk
Sukuk are the most significant mechanisms for Islamic financial services to generate cash flows from the Islamic capital market and raise finance through Islamic capital market operations using Shariah compliant structures...
  Right of beneficiaries for endowment contracts: Fitting French life insurance to Islamic morality
The Islamic finance industry has yet to fully take off in France: but the insurance sector represents a positive opportunity for Shariah compliant ethics to access the market...
Case Study
Meezan Tahaffuz Pension Fund

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