Zurich Insurance is set to take over ownership of Malaysia’s MAA Takaful after a US$134.6m deal received regulatory approval, giving the Swiss firm an inroad into the world’s second largest Islamic insurance market.
Zurich, Europe’s fifth-biggest insurer, will pay MYR 525m (approximately US$134.6m) for the deal, which has has been approved by the minister of finance in Malaysia, but remains subject to the approval of MAAG’s shareholders, amongst other customary closing conditions. The closing of the transaction is expected to take place within three months of this signing.
Zurich Insurance has been refocussing its business of late, scaling back parts of its Asian franchise with a move into takaful products potentially giving the firm markets in the Gulf and southeast Asia.
Zurich Insurance already has a presence in Bahrain, Qatar and the United Arab Emirates.
MAA Takaful held 1.2bn ringgit ($306.7m) worth of assets as at June 2015. Zurich said that it would honour all existing takaful contracts as part of the deal and would continue servicing all MAA customers.
Takaful is described by Wikipedia as a ‘co-operative system of reimbursement or repayment in case of loss paid to people and companies concerned about hazards, compensated out of a fund to which they agree to donate small regular contributions managed on behalf by a takaful operator’.
To be classed as takaful, a firm must follow strict religious guidelines, including bans on interest and pure monetary speculation, and a prohibition on investing in industries such as alcohol and gambling.