Takaful Oman, the first Islamic insurance company in Oman, has shown impressive growth since it commenced operations two years ago. Sayyida Rawan Ahmed Al Said, Vice Chairman and CEO shares her thoughts on the company’s achievements and the industry. A report by Mayank Singh and A Harikumar.
Takaful Oman is continuing its excellent run after a great beginning. The first Islamic insurance company of Oman which achieved break-even in the inaugural year itself has now turned profitable and is winning more businesses. It has also won several accolades for its impressive performance.
Sayyida Rawan Ahmed Al Said, the vice chairperson, managing director and CEO of Takaful Oman is obviously proud of the performance of her company. “We are very happy with the performance. It is the wisdom and strategies of the board which set up the company that made this success possible,” she said on the continuing growth of the company after its successful IPO. “Our success has been widely acknowledged through the awards which we have been presented with,” she added.
Although the year that ended was full of excitement, Sayyida Rawan knows that there are challenges ahead. “The challenge is to sustain this achievement, and we are trying to accomplish that,” she said. “We have kept our shareholders happy and our services are good. That is seen in a number of contracts that we have won from the corporates and the retails,” she added.
Recounting the setting up of the company, Sayyida Rawan said it was a challenge. “I was very passionate about Takaful Oman and was sure that there were good prospects for the company. Actually it was a committee that set up the company. Most of the promotors were there in the committee. I did the supervising initially and was later asked to become the CEO. With God’s blessings and the excellent support from shareholders and the team, we managed to achieve. Looking back, I feel I took a good decision.
Being a new concept, did Islamic insurance need any special effort to create awareness? Sayyida Rawan answers: “Islamic insurance was something new which everyone had been looking for. Because of religious sensitivities, a number of people did not have any type of insurance. They were actually waiting for Takaful Oman to start. We have also been encouraged by the opening of two Islamic banks. The market was looking for Islamic finance and Takaful insurance. So the necessary awareness was already there.”But despite this, Takaful Oman is now spreading awareness of Islamic insurance while competing with the conventional ones.
She continued, “We are targeting not only those who are looking at us from a religious perspective, but also cater to the needs of all types of customers. This means, we have to compete with conventional insurance players also from the service and product perspective. Regarding banks, we cater to commercial as well as new Islamic banks. Currently Takaful Oman has a staff strength of around 55 with almost 70 per cent Omanisation of. The company is trying to recruit more Omanis and develop their knowledge and skills.
Takaful Insurance offers all types of products that are available in the market. Although motor is the highest contributor to their kitty similar to the market trend, they have a number of options in their portfolio which are also doing well. “We have other lines of businesses which are also significant for us”, Sayyida Rawan said.
She dismisses the perception that Islamic products are expensive compared to the conventional insurance products. “We are not expensive. We have to be as competitive as others as people are price-sensitive,” she averred.
On bancassurance she says, “We have tie-up with a few banks for bancassurance and are trying to expand it. We work with Islamic banks as well as Islamic windows of the conventional banks.”
Takaful Oman has a paid-up capital of RO10mn conforming to CMA’s stipulation on paid-p capital for all newly registering insurance companies. “We have adequate capital. The issue is how to utilise it. We don’t have many Islamic instruments in which we can invest this capital”. Pointing out constrains in investing, Sayyida Rawan said: As per the current laws, there are difficulties with regard to owning real estate. Companies are not allowed to own real estate for investment purposes unless they have been specifically established for real estate purposes. Regulations promulgated by the Ministry of Housing do not allow it as of now. Secondly, there are not many Sukuk issuances where we can invest, and finally markets are not performing as expected by the investors”.
Stressing on the need for more Sukuks, Sayyida Rawan observes that investments in Sukuks bring income to companies and when Sukuks are few, demand tends to be very high and pricing tough. “We need to have more of these so that it is easier to acquire, hold and trade them,” she said. She added that regulators have realised the importance of issuing more Sukuks and the government’s recent Sukuk is a beginning in the right direction.
Sayyida Rawan says thatTakaful has strategic alliances with a few banks and insurance companies and has been doing business along with them for quite some time. We have signed an MoU with Islamic banks as well as the Islamic windows of commercial banks. Clearing doubts as to whether Islamic insurance involves complex procedures or paperwork for clients, Sayyida Rawan says that the process involved in taking Islamic insurance is as simple as taking conventional insurance, though she feels that the Oman market is overcrowded with insurance companies as there are more than 20 companies working in the same arena. As the competition is very tough and market is price-sensitive, companies have to be careful. “We have to compare between risk and return. The risk profile has to become very clear. We make sure that the service provided is adequate and we are not getting into very high-risk areas.”
Takaful Insurance has turned profitable now. “Our profit for shareholders has crossed RO1mn. On combined and consolidated account, we are profitable. But policy holders may not be given profit share now. We will be releasing details soon. Policyholders will have to wait till the portfolio becomes big,” avers Sayyida Rawan.
Oman National Investment Corporation Holding (ONIC) had seven per cent share in Takaful while Ominvest had 7.5 percent shares. With the merger of the two, they have now around 15 percent share in the company and are looking for buying more. Other shareholders include ONIDCO, Muzn Islamic Banking of NBO, Oman Investment Corporation, Bank Muscat’s Meethaq etc.
On the emerging situation in the market arising out of oil price fall and the strategy of Takaful Insurance to face it, Sayyida Rawan says she will review how to cut costs. “As we are a new company that is growing, it is not easy to cut costs. The need is to spend wisely. As many projects are delayed or postponed we have to ensure that what we are spending is in tune with the projects that we are getting. As our focus will be to expand profitably, in addition to opening new branches we may take the help of agencies to reach out to people. The company has branches in Nizwa, Sohar and Ibri, while a new branch will be opening soon in Salalah.
For Sayyida Rawan, the year 2015 was a year of achievement and awards. She won three major awards. “I feel honoured and proud to win awards in 2015 when the Sultanate was celebrating the 45th National Day. First I was selected as the Best CEO in GCC and that was the beginning of awards. The second award was Asian Women Leadership award, an annual leadership award. The third award I got recently was the Middle East Accountancy and Financing Excellence Awards, 2015.
The last one was for my achievements as an individual while others were at the company level,” she adds.
“It proves that Omani women can compete with anyone else in other parts of the world and win awards. It is the wise leadership of HM Sultan Qaboos bin Said and the opportunities provided by His Majesty which has brought us to this level. We are recognised even in advanced countries now,” Sayyida Rawan concludes.