KUALA LUMPUR (Reuters) - Sharia-compliant reinsurer Best Re will grow its business in Africa and eventually expand into South America to diversify its sources of income which is mainly derived from Asia, a senior official said on Monday.
Asia, specifically countries such as China, Indonesia and Malaysia, accounts for three-quarters of Best Re’s income and the company wants to bring this share to about 60 percent within five years, general manager Riadh Karray said.
“We would try to develop the other businesses so that we can reduce it from 75 (percent) to 70 to 60,” Karray said in an interview.
“In 10 years’ time, the only part of the world we should go to is South America, maybe in 5, 7 years from now. Our target is emerging markets like Brazil.”
Karray said Africa offered better margins than Asia although the market was smaller.
Best Re, which is owned by Dubai-based takaful group Salama, also operates in Turkey and the Middle East. It targeted gross written premiums to reach about $350 million last year.
It writes both conventional and Islamic insurance, a practice which is not uncommon among sharia-compliant reinsurers due to the limited size of the takaful industry.
Karray forecast the retakaful industry to grow 10-15 percent globally as the availability of sharia-compliant investments opens up new markets.
“In the Middle East, for example, the people and regulators are trying to enhance this industry because people would like to buy halal products which they didn’t have in the past,” he said.
“There is a bigger demand for takaful, especially on the personal line.”
Takaful companies can only invest in assets that comply with Islamic law, ruling out investments involving excessive speculation, gambling, pork and alcohol.
Total takaful contributions could reach $7.7 billion a year by 2012, Ernst & Young has forecast. But global takaful contributions are less than 1 percent of the total insurance premium spend annually, industry lawyers Clyde & Co said.