In the latest move that demonstrates Malaysia wants to step up its offerings of Islamic products, HSBC Insurance (Asia Pacific) Holdings Limited has obtained approval from Bank Negara Malaysia to form a joint venture Islamic insurance company in Malaysia in partnership with Jerneh Asia Berhad and The Employees Provident Fund of Malaysia (EPF).
The plan calls for HSBC Insurance to take up 49% of the equity in the new company for a consideration of M$49 million ($13 million). Jerneh Asia will take a 31% stake for M$31 million and EPF will take 20%, injecting M$20 million into the joint venture.
Jerneh Asia, through its 80%-held Jerneh Insurance Berhad, is a leading general insurance provider
in Malaysia. It was established in 1970 and offers a wide range of general insurance cover
for both commercial and retail clients. The EPF of Malaysia is a national savings scheme that was established in 1951 and has over 5.2 million active members and manages funds totalling RM253.6 billion.
The new company will be capitalised at M$100 million (US$26 million). It is expected to offer a range of life and general takaful or Islamic insurance, products to both retail and corporate customers.
“Through this licence to develop a takaful joint venture with Jerneh Asia and The Employees Provident Fund of Malaysia, we intend to build on the success of the Islamic banking business HSBC Bank Malaysia has developed since 1994," says Zarir J. Cama, deputy chairman and chief executive officer of HSBC Bank Malaysia Berhad. "We are excited about the growth opportunities offered by Malaysia’s takaful industry, which has a low penetration rate of 5% amid a population that is 60% Muslim.”