By A. Stephanie
Etiqa, Maybank’s insurance arm, is set to split its general and life businesses across both conventional and takaful insurance divisions next year, to comply with Bank Negara Malaysia’s policy that composite insurers and takaful operators relinquish their composite licences by 2018.
The implementation of the Financial Services Act 2013 (FSA) and Islamic Financial Services Act (IFSA) 2013 has given composite insurance operators five years to split their life/family and general businesses into different entities, with separate licences.
The requirement for composite insurers to segregate their operations into separate licences for life and general businesses has lead to rounds of market consolidation, with the most recent being Canadian-owned Pacific Insurance buying MCIS’ general insurance business.
For Etiqa, this will simply mean its two divisions for conventional and life insurance would be split further into two more entities with separate licences.
Kamaludin Ahmad
“We are working on a framework which would ensure we can continue to leverage on all shared platforms in terms of operations, investment, risk management and distribution while still complying with the policies,” Group Etiqa boss and Maybank Ageas Holdings Bhd CEO Kamaludin Ahmad said, this today.
Maybank Ageas is the parent company of both Etiqa Insurance Bhd (EIB) and Etiqa Takaful Bhd (ETB). Kamaludin and both conventional and takaful division CEOs were speaking to reporters after unveiling the group’s financial results for 2014.
He said: “We don’t foresee much of a problem with this. We still have until 2018 to split both entities but our plan is to make it happen much earlier. When we next hold this press conference, we might have two more CEOs sitting in.”
Etiqa recorded profit before tax for 2014 of RM767 million, on the back of combined gross premiums and contributions of RM5.02 billion for the year. The group’s total assets are valued at RM31.6 billion as of end-2014.
In addition to its 2,000 employees, Etiqa commands a 15,000-strong agency force, 30 insurance and takaful branches, as well as over 400 Maybank branches and other third-party banks.
Besides the enactment of new regulations, Etiqa will also have to comply with the central bank’s excess capital stipulations under its risk-based capital (RBC) regime for operators.
Kamaludin said RBC requirements have not been a problem at all: “Both our conventional arms have capital adequacy ratios of 160%, above the 130% stipulated by Bank Negara’s framework.”
Denying rumours swirling about the group’s listing, he said: “With regards to the IPO (initial public offering), we’ve been approached by so many investment bankers that it feels like we are the hottest girl in town as far as insurance and takaful operators are concerned.
“This is not something we are considering at the moment. I believe the investment community is pressuring the media, trying to trigger us to go for listing,” he joked.
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