One of the world’s largest carriers has just gained approval that will allow it to tap into the world’s second biggest Islamic insurance market.
Zurich Insurance is set to acquire 100% of the shares of MAA Takaful after the transaction obtained approval from Malaysia’s central bank and finance ministry, Reuters reported.
One of the 11 Islamic insurers in Malaysia, MAA Takaful is a joint venture launched in 2006 by MAA Group Berhad and Bahrain's Solidarity, which hold 75% and 25% stakes respectively.
According to Reuters, the Asian insurer held US$306.7 million worth of assets as of June 2015, a 5% increase from a year earlier.
Zurich’s acquisition of MAA Takaful was first proposed in November 2015.
The Swiss insurer warned that despite the recent regulatory approval, there was “no guarantee that the acquisition will be completed” since it still needed the green light from MAA’s shareholders, The International Advisor reported.
If the buyout succeeds, Europe’s fifth biggest insurer will gain a foothold in the second largest Islamic insurance market in the world.
The acquisition will also enable Zurich to further expand its business in the Gulf and Southeast Asia if it moves into takaful insurance.
Based on Sharia law, takaful is a type of Islamic insurance, where members contribute funds into a pooling system in order to ensure each other against loss or damage.
Takaful firms should adhere to religious guidelines, including bans on interest and pure monetary speculation and prohibitions on alcohol and gambling investments.