Etiqa Takaful concludes debut Tier 2 capital subordinated Sukuk

8 days to go Monday 2nd June 2014 Etiqa Takaful concludes debut Tier 2 capital subordinated Sukuk Daily Cover MALAYSIA: Following an announcement made earlier in April, Etiqa Takaful, Malaysia’s largest Takaful operator, has successfully auctioned its Sukuk on the 30th May 2014. The subordinated Sukuk Musharakah of RM300 million (US$93.28 million) in nominal value carries a tenor of 10 years on a 10 non-callable five basis. The Sukuk will qualify as Tier 2 capital, subject to compliance with the requirements as specified in the Risk-Based Capital Framework for Takaful Operators issued by Bank Negara Malaysia (BNM). Proceeds from the issuance will be utilized, among others, for the insurer’s business operations, working capital and other Shariah compliant corporate purposes. According to a filing on Bursa Malaysia, all regulatory approvals for the establishment and issuance of the subordinated Sukuk Musharakah were obtained from BNM and the Securities Commission Malaysia on the 4th March 2014 and 22nd April 2014 respectively. Prior to the issuance, the proposed Sukuk was assigned a final long-term rating of ‘AA1/stable’, while the company’s claims-paying ability was reaffirmed at ‘AAA/stable/P1’, by RAM Ratings. According to the local rating agency, Etiqa Takaful is adequately capitalized. The company’s consolidated capital adequacy ratio (CAR) stood at 143.5% as at end of December 2013, which is above the minimum CAR of 130%. “With the issuance of the proposed subordinated Sukuk, the company’s prospective CAR should hover around 165% by end-December 2014,” suggested RAM in a recent statement. According to the company’s financials, for the 2013 fiscal year, Etiqa Takaful posted a net profit of RM188.5 million (US$58.61 million), a 50% increase from the previous year. The insurer’s assets stood at RM11.2 billion (US$3.48 billion), up 9.6% from a year earlier, representing close to half of total Takaful industry assets. Etiqa Takaful is a wholly-owned subsidiary of Maybank Ageas Holdings, which in turn is 69.05%-owned by Etiqa International Holdings, a wholly-owned subsidiary of Maybank. 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