S&P Concludes Takaful, Retakaful Insurance to Continue Growth Trend
Standard & Poor’s has concluded that, following a “positive year” in 2009, the “takaful and retakaful (Islamic insurance and reinsurance) sector is likely to continue to grow in 2010.”
S&P’s report – Takaful Insurance Has Long-Term Viability And Benefits From Expected Growth, But Stiff Competition Persists – notes that the “long-term viability of these sectors remains supported by high expected levels of growth, broadly positive technical results, and an increase in profitability, particularly in the GCC region and Malaysia.”
Credit analyst Neil Gosrani added: “Nevertheless, while these positive factors should support the growth of the sector, we believe that the highly competitive and, in some cases, developing, nature of the local marketplace, as well as the impact of global investment markets on returns, continue to place an ongoing strain on sustainable development.”
S&P also stressed its belief that “competitive pressures from within the sector, and from conventional insurers, means that success in this market requires careful navigation.
“Since our first takaful rating in 1997, we have monitored the rapid development of an industry that we believe has benefited from the ongoing economic development in its core regions. Having grown from a niche product servicing limited demand, we believe that takaful has reached a critical mass in the past five years and is now firmly established within the global risk management markets.”
Gosrani also indicated that S&P considers the “potential for sustained growth in this market is significant, buoyed by the still-low insurance penetration and the growing recognition and acceptance of the concept of insurance and its benefits.”
The report is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor’s public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Alternatively, call one of the following Standard & Poor’s numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow (7) 495-783-4011.
Source: Standard & Poor’s
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