IN­SUR­ANCE IN­DUS­TRY: SOLID RE­BOUNDS ON RO­BUST PRE­MI­UMS

Insurance - - INDUSTRY UPDATES -

AC­CORD­ING to RHB Re­search In­sti­tute Sdn Bhd (RHB Re­search), the in­sur­ance and taka­ful in­dus­try saw a solid re­bound in prof­itabil­ity in terms of net in­come (net un­der­writ­ing and in­vest­ment in­come). Based on Bank Ne­gara Malaysia’s (BNM) Fi­nan­cial Sta­bil­ity and Pay­ment Sys­tems Re­port 2012, the life in­sur­ance and fam­ily taka­ful sec­tor re­ported a 38.2% in­crease in ex­cess in­come over outgo to RM17.6 bil­lion on the back of pre­mi­ums and con­tri­bu­tions growth of 11.2%. The re­port ex­plained that the gen­eral in­sur­ance and taka­ful sec­tor’s op­er­at­ing prof­its ac­cel­er­ated by a higher 72.6% to RM2.9 bil­lion, on the back of pre­mi­ums and con­tri­bu­tions growth of 11.1%. The re­port also noted that the gen­eral in­sur­ance and taka­ful in­dus­try also ben­e­fited from a low com­bined ra­tio of 96.9% com­pared with 104.7% in 2011. On the other hand, the re­search firm noted that the in­dus­try’s cap­i­tal ad­e­quacy ra­tio (CAR) was at 222.3% com­pared with 222.5% in 2011, which is well above BNM’s su­per­vi­sory tar­get cap­i­tal level (STCL) re­quire­ment of 130%. This was par­tially sus­tained by higher re­tained prof­its which boosted to­tal cap­i­tal avail­able (TCA). Ad­di­tion­ally, BNM has made it manda­tory for in­sur­ance com­pa­nies un­der its purview to have CAR ex­ceed­ing the com­pany’s own in­ter­nal tar­get cap­i­tal level (ITCL), based on its risk ex­po­sure, at all times. It also men­tioned that in­sur­ance risk re­mained the largest risk com­po­nent to the ITCL, com­pris­ing 50.7% of to­tal cap­i­tal re­quired (TCR), while mar­ket risk ac­counted for 30.6%. Mean­while, RHB Re­search is of the opin­ion that the in­sur­ance in­dus­try’s out­look re­mains bright as it ex­pected BNM would en­hance the CAR re­quire­ments.

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