RAM Ratings Reaffirms Etiqa Takaful's RM300 Million Subordinated Sukuk Musharakah AAA/P1 Ratings
RAM Ratings Reaffirms Etiqa Takaful's RM300 Million Subordinated Sukuk Musharakah AAA/P1 Ratings
Mal, Wakalah, Reserves
Mal, Wakalah, Reserves
Transcription
- 5 /27/2016 Latest Announcement - (News ID : 2016052700027) Latest Announcement News ID : 2016052700027 Subject : Etiqa Takaful Berhad Etiqa Takaful Berhad Organisation Name: RAM RATING SERVICES BERHAD News Type: RATING ANNOUNCEMENT Reference Site: None Embargo Date: 27/05/2016 Embargo Time: 05:30 PM Expiry Date: 26/06/2016 Priority: Medium Summary: RAM Ratings reaffirms Etiqa Takaful's AAA/P1 ratings Attachments: No attachment available. Disclaimer: The user, including a user who is also a FAST Participant, expressly agrees that the use of this website which is accessible at https://fast.bnm.gov.my/ is at the user's sole risk. The information contained in this FAST website is compiled by MyClear Sdn. Bhd. (MyClear) and is provided on an "as is" basis without any representations or warranties of any kind, either expressed or implied. While MyClear makes every effort to ensure that information contained in the FAST website are accurate and disseminated in a timely and efficient manner, the user acknowledges that delays, errors, omissions or inaccuracies may occur. MyClear disclaims any liability pertaining to the consequences of any delays, errors, omissions or inaccuracies arising out of or relating to the FAST website or information, including but not limited to, any decision made or action taken by a user in reliance upon such information, or for damages suffered, whether direct, consequential, special, punitive, indirect or otherwise, notwithstanding having been advised of the possibility of such damages. In the event of any dispute, the official records of MyClear shall prevail. MyClear, Bank Negara Malaysia or any of its affiliates, officers, directors, agents or any other party involved in creating, producing or delivering the FAST website, shall not be liable for any direct, consequential, special, punitive, indirect, incidental or other damages arising out of or in any way connected with the use or inability to use the FAST website or information, whether based on contract, tort, liability or otherwise, even if advised on the possibility of any such damages. Content https://fast.bnm.gov.my/fastweb/public/PublicInfoServlet.do?chkBox=2016052700027&mode=DISPLAY&info=NEWS&screenId=PB010400 1/2
- 5 /27/2016 Latest Announcement - (News ID : 2016052700027) RAM Ratings has reaffirmed the AAA/Stable/P1 claimspaying ability ratings of Etiqa Takaful Berhad (ETB or the Takaful Operator). Concurrently, we have reaffirmed the AA1/Stable rating of its RM300 million Subordinated Sukuk Musharakah. ETB has retained its leading position in the Malaysian takaful industry, underpinned by its extensive distribution capabilities and strong brand recognition as the takaful arm of Malayan Banking Berhad (Maybank, rated AAA/Stable/P1). ETB operates under the brand name ''Etiqa'' which it shares with its sister company, Etiqa Insurance Berhad (EIB, rated AAA/Stable/P1). The entities also have a common senior management team. The ratings consider the strong operational support and financial flexibility that ETB derives from its parent, Maybank Ageas Holdings Berhad. In FY Dec 2015, ETB's gross contributions rebounded 8% to RM2.4 billion, driven by an uptick in its family takaful credit business. The Takaful Operator's consolidated pretax profit, however, declined 11.5% to RM249.2 million on account of lower investment returns and higher claims and benefits incurred. To some extent, the overall commissions and management expenses ratio had moderated the drop in pretax profit. Nevertheless, ETB's consolidated pretax profit margin and ROA of 11.1% and 2.0%, respectively, stayed favourable against its takaful peers. While ETB's family takaful new business recovered in fiscal 2015, the bulk of the new business is still sourced from singlecontribution credit products a less sustainable revenue stream. The Takaful Operator's shift to regularcontribution policies will help stabilise earnings in the future, although meaningful traction could take time. In spite of favourable topline growth in its general takaful business, ETB's underwriting profit contracted 33% to RM88.7 million as a result of higher motor claims and increased wakalah fees. The Takaful Operator's exposure to the Motor Act segment's steeper claims stayed high, given its concentration in the motor class. Consequently, the combined ratio worsened to 91.3% in FY Dec 2015 (FY Dec 2014: 84.6%), resulting in lower profit sharing. While a higher wakalah fee deduction reduced the general takaful risk fund's underwriting surplus, the increase in fee income of the shareholders' fund outweighed the expenses, leading to the latter registering an improved pretax profit before surplus transfer. ETB's capitalisation continues to strengthen, reinforced by its consistent earnings generation capacity and capital retention policies. As at endDecember 2015, its regulatory capitaladequacy ratio (CAR) improved to above 160%. ETB's shareholders' fund remained strong and is wellpositioned to support some undercapitalised sub funds, if required. Elsewhere, ETB's general takaful fund remained adequately reserved against future liabilities, with a net technical reserves ratio of 128.3% as at endDecember 2015. Media contact Siew Shwu Ying (603) 7628 1071 shwuying@ram.com.my The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security's market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations. RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings' credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications. Similarly, the disclaimers above also apply to RAM Ratings' creditrelated analyses and commentaries, where relevant. Published by RAM Rating Services Berhad © Copyright 2016 by RAM Rating Services Berhad https://fast.bnm.gov.my/fastweb/public/PublicInfoServlet.do?chkBox=2016052700027&mode=DISPLAY&info=NEWS&screenId=PB010400 2/2
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