Insurance firm MAA Group Bhd is caught between Bursa Malaysia’s PN17 rules — which require it to buy another business to lift the status — and the Islamic Services Act 2013, which only allows it to buy a financial services company.
Executive chairman Tunku Datuk Ya’acob Tunku Abdullah said the firm is not proceeding with any regularisation plan and has informed Bursa Malaysia of its intention.
“How many financial services companies are out there for sale? I am being asked to buy something that I cannot. “We have explained this to Bursa Malaysia and they understand. It is about finding a common ground to the issue,” he told reporters last Friday.
MAA has been granted an extension of time up to July 31, 2014, to submit a regularisation plan to the regulator.
The group was classified as a PN17 company in 2011. “We are not going to pursue a regularisation plan which means acquiring another business, but instead we are going to seek a lifting of the PN17 status by virtue of having a business, which is takaful,” said MAA CEO Muhamad Umar Swift.
The firm is now looking at the takaful market of the Philippines to strengthen its insurance business, which will be aided by the RM177 million fund set aside for capitalisation and expansion this year.
MAA has yet to set a timeline for the Philippines takaful venture but had recently met the country’s central bankers and insurance industry players through a workshop.
“They are all very positive. We see a huge potential for growth in the Philippines,” he stressed.
Muhamad said MAA would, if granted, start in the Southern Philippines, in Mindanao in particular, as the insurance firm believes the region would be most suitable to introduce the new scheme of insurance.
MAA entered the Philippines market through its general insurance product which contributed a low RM28 million to the group’s total premium. Tunku Ya’acob did not rule out the sale of MAA’s general insurance business in the Philippines, making the company a wholly takaful industry player.
“We are not ruling it (the sale) out. We thought about it before. But the interesting part is the Philippines general insurance business have always reported profit, and the trend is on growth mood.
“So it is not our intention to sell it but if anything comes our way and if the deal is good, why not,” he added.
Tunku Ya’acob also said the challenge that MAA foresees in operating a takaful business in the Philippines is that the government must allow it to operate through a window, by not asking MAA to form a new company to venture there.