Insurance industry’s capital adequacy ratio remains strong at 234.9pc

DESPITE economic volatility and the shrinking of disposable income, the insurance industry maintained strong levels of capitalisation in the seven month period to July, according to the Finance Ministry’s Economic Report 2016/17.

The capital adequacy ratio remained strong at 234.9 per cent, while similarly, total capital buffers in excess of the minimum requirement rose slightly to RM29.8 billion for the same period, said the report.

For the life insurance sector, new business premiums grew 5.9 per cent to RM5.5 billion, which was largely supported by the growth of non-participating life policies and annuities.

Life insurance claims grew 2.3 per cent to RM12.1 billion during the first seven months.

Despite an increase in claims, the excess income rose RM8 billion during the same period with higher net capital gain of RM2.3 billion.

The market penetration rate of life insurance stood at 40.1 per cent for the same period this year.

The sector’s total assets expanded 5.8 per cent to RM207 billion, the bulk of which comprised corporate bonds, accounting for 46.5 per cent of the total insurance fund assets, followed by equities at 19.6 per cent.

Operating profit for the general insurance sector remained steady at RM1.6 billion, mainly due to lower claims, with claims ratio standing at 54.1 per cent.

This was largely contributed by the motor segment, with claims of RM2.9 billion and the claim ratio at 65.7 per cent.

The general insurance sector’s assets rose 2.4 per cent to RM32.3 billion during the period under review.

Cash and deposits continued to account for the largest asset class held by general insurers at 23.6 per cent of total assets.

The takaful fund grew steadily by 6.4 per cent to RM26.3 billion, supported by corporate sukuk valued at RM14.5 billion, which is 55.1 per cent of the segment’s total assets.

New businesses of family takaful recorded higher gross contributions of 7.4 per cent to RM2.3 billion, mainly contributed by medical and health takaful.