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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 1st October 2014
Volume 11 Issue 39
   
Cover Story
IFN Rapid
News Briefs
Asset Management
Takaful
Ratings
Moves
IFN Reports
  Building on previous success: The Al-Ameen Islamic Principal Preservation Fund IV
  IFN Global Trendswatch
  IFN Weekly Poll: As the global financial community looks towards the emerging markets, could these countries potentially be the prime upcoming destinations for Islamic finance activities?
  IFN Eurekahedge Islamic Fund Index round-up
  Sovereign Sukuk: An aerial view
  New Islamic banking laws to complement Azerbaijan’s banking sector
  NBAD targets Muslim wealth with Shariah compliant version of star conventional fund
  REDmoney partners with NASDAQ Dubai and AIMS to develop Islamic finance human capital pool
  Islamic finance and agriculture: An unrealized area of potential
  Combining the best of both worlds in expanding Islamic finance talent pool
  Rasameel and Ejarah Global target western markets
  Omani SME sector receives boost as Meethaq inks Shariah compliant deal with Zubair SEC
  Inaugural Sukuk issuance for BTMU Malaysia
IFN Country Correspondents
  The first Islamic financing guarantee company established in Indonesia
  The opinion of the Economic, Social and Environmental Council on the Islamic Banking Bill
  The case for an exhilarating prospect
  Ziraat Bank applies for participation banking license
IFN Sector Correspondent
  US real estate: Back in style
IFN Country Analysis
  One man show: Islamic finance in Bosnia-Herzegovina
IFN Sector Analysis
  Private banking and wealth management: Towards a sustainable growth
Features
  Are the Cayman Islands the pre-eminent jurisdiction for the growing appetite for Sukuk in the US?
Cayman has always been a popular jurisdiction for incorporating Sukuk issuers...
  Sukuk trading needs to modernize as sector expands
The rapid expansion of the Sukuk sector is a welcome development for all who recognize its value as an ethical and efficient means of raising capital...
  The Shariah asset management puzzle: Is it all in the packaging?
Shariah compliant asset management shares values and principles with multiple other faith-based and ethical investment approaches...
Case Study
Khazanah exchangeable Sukuk: Testament to a healthy track record

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