BIMB Integrated Annual Report 2017

MANAGEMENT DISCUSSION & ANALYSIS SYARIKAT TAKAFUL MALAYSIA BERHAD’S PERFORMANCE REVIEW & OUTLOOK GROUP PROFIT BEFORE ZAKAT AND TAX (RM’ Mil) 2016 2012 2013 2014 2015 2017 200 250 300 150 100 50 0 253.7 221.0 204.2 186.7 125.5 179.3 GROUP OPERATING REVENUE (RM’ Mil) 2016 2012 n Gross Contributions n Investment Income 2013 2014 2015 2017 2,000 2,500 1,500 1,000 500 0 1,833.8 1,732.6 1,521.0 1,409.6 1,374.0 1,480.3 233.6 232.7 243.0 267.6 280.7 305.4 2017 Key Awards • “Best Takaful Company in Malaysia” award at the 11 th International Takaful Awards 2017 in London • The Edge-BRC Highest Returns to Shareholders Over Three Years Gold Award under the Finance Sector • The Edge-BRC Highest Return on Equity Over Three Years Silver Award under the Finance Sector • HR Asia’s Best Companies to Work for in Asia 2017 Award • 2017 SHARE/GUIDE ICT Award Market competition in 2017 was amplified by the uncertainty of the economic environment and the emergence of digital disruption. The business growth of credit-related business was alsochallengedbyMalaysia’s slower loangrowth rate, competitive pricing and higher claim ratio. Despite these challenging factors, Takaful Malaysia has managed to maintain its major market position and achieve positive underwriting results. The Company managed to further grow its bancassurance business by 30% through its strengthened partnership with its bank partners, and product penetration strategy to increase business from other existing bank partners. The commendable earning growth emanates predominantly from robust contribution from its Family Takaful business. Another key distribution channel for Takaful Malaysia’s credit related business came from its participation as a panel Takaful provider for Lembaga Pembiayaan Perumahan Sektor Awam (“LPPSA”) that provides Mortgage Takaful protection to government servants. Takaful Malaysia maintained its top market position in the takaful business from the mortgage provided by LPPSA as the Company focused on strong branding, and various outreach programmes to reach out to civil servants to create brand awareness and provide groundwork support for the loan applicants and developers. During the year, Takaful Malaysia made a commercial decision to review its Individual Investment-Linked Medical Takaful product to ensure pricing adequacy for future medical costs, taking into consideration the current deteriorating claims experience as well as rising medical costs which increased by more than 15% per annum and the impact of the Goods and Services Tax. The market environment for employee benefits continued to be very competitive in 2017. Aggressive price war was one of the key challenges in maintaining market position while ensuring adequate pricing. However, the Company has been very careful in accepting business with stringent pricing controls to ensure the sustainability of the employee benefits business in the long- term. As part of our strategy to further penetrate the employee benefits market, it specially developed a unique top-up medical Takaful Malaysia’s wide product range, strong operational support and services, and its professional sales team continue to make it an outstanding market player. Within an increasingly competitive industry, Takaful Malaysia is committed to catalysing further value through a digital strategy to provide more distinctive, value-added, efficient and flexible services. 59 Overview Value Creation Accountability Financial Statements Sustainability Performance Data Shareholders Information 21 st AGM Information Management Discussion & Analysis y