CONTENTS...Menara Takaful Malaysia No. 4, Jalan Sultan Sulaiman 50000 Kuala Lumpur Tel : +603-2268...

CONTENTS Strategic Review About Us

- Vision, Mission & Corporate Values ............. 002 Group Structure & Corporate Information .... 004 Five-Year Financial Highlights ......................... 006 Management Discussion & Analysis ............. 008 Sustainability Report ......................................... 021

Profiles ProfileofBoardofDirectors ............................ 052 ProfileofShariahAdvisoryBody .................... 055 ProfileofSeniorManagement ........................ 058

Corporate Governance Corporate Governance Overview

Statement ............................................................ 060 AuditCommitteeReport .................................. 076 StatementonRiskManagementand

Internal Control ................................................... 081 AdditionalComplianceInformation ............... 087

Financial Statements Directors’ Report ................................................ 088 ShariahAdvisoryBody’sReport ..................... 093 Statements of Financial Position ................... 095 StatementsofProfitorLossandOther

Comprehensive Income ................................... 097 Statements of Changes in Equity ................... 102 Statements of Cash Flows .............................. 105 Notes to the Financial Statements ................ 107 Statement by Directors ..................................... 299 Statutory Declaration ........................................ 300 IndependentAuditors’Report ......................... 301

Other Information Notice of 35th Annual General Meeting ........ 307 Statement Accompanying Notice of

35th Annual General Meeting .......................... 309 ShareholdingStatistics..................................... 310 Particulars of Properties .................................. 314 BranchNetwork&Subsidiary

Companies .......................................................... 320 Form of Proxy

https://www.takaful-malaysia.com.my/corporate/investor/Pages/financialreports.aspx

Syarikat Takaful Malaysia Keluarga Berhad[198401019089 (131646-K)]

https://www.takaful-malaysia.com.my/corporate/investor/Pages/financialreports.aspxhttps://www.takaful-malaysia.com.my/corporate/investor/Pages/financialreports.aspx

Strategic Review

SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT • 2019002

About Us

Syarikat Takaful Malaysia Berhad (“STMB”) was incorporated on 29November1984.TheCompanyhasapaidupcapitalofRM196.8millionwith total assets of RM10.3 billion at Group level as at 31 December 2019. InaccordancewiththeIslamicFinancialServicesAct2013(“IFSA”),STMBseparated its composite licence into two (2) licenced entities. STMB,nowknownasSyarikatTakafulMalaysiaKeluargaBerhad(“STMKB”)tomanage the Family Takaful business whilst Syarikat Takaful Malaysia AmBerhad(“STMAB”)tomanagetheGeneralTakafulbusiness.STMKBis theholding companyandowns100%ofSTMAB.BothSTMKBandSTMABoperatethroughacombinednetworkofservicecentresacross24locationsnationwide.

Our

Our VISION

MISSION

We want to beTHE PREFERRED CHOICE FOR INSURANCE

Weaimtoexceedcustomersexpectationsthrough:

• Operational Excellence• Technology Driven Capabilities• Product Innovation• Performance Oriented Culture

Whilstdeliveringsuperiorshareholdervalue.

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003SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT • 2019

About Us

Our CORPORATE VALUES

The defining pillars of our Brand are the valuesthat we continuously strive to manifest through our work.

InspiringOurperseverancetoourcontinueddevelopmentofourindustry,bringingittothenextlevel.

HumanitarianOur promise to the community is the pledge of ourcompassionandcare.

ProfessionalOurpledgetoachievethestandardsandpromisesthatwedelivertoourcustomers.

IntegrityOurcommitment invaluesofpersonal integrityand tobuildtrust.

TeamworkOurdedicationtoteamworkisatestamentofourunityandtrusttowardseachother.

Strategic Review


Group Structure

Corporate Information

SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHAD [198401019089 (131646-K)]

Subsidiary Companies

100.00% 56.00% 42.73%

57.24%

SYARIKAT TAKAFUL MALAYSIAAM BERHAD

[201701032316 (1246486-D)]

BOARDOFDIRECTORSDeputy ChairmanDATIN SRI AZLIN ARSHADIndependentNon-ExecutiveDirector

MembersDATO’ OTHMAN ABDULLAHSeniorIndependentNon-ExecutiveDirector

MAHADZIR AZIZANNon-IndependentNon-ExecutiveDirector

MOHD AZMAN SULAIMANIndependentNon-ExecutiveDirector

DAMANHURI MAHMODNon-IndependentNon-ExecutiveDirector

SURAYA HASSANIndependentNon-ExecutiveDirector

SHARIAHADVISORYBODYChairmanPROFESSOR DR. MUHAMAD RAHIMI OSMAN

MembersDR. AHMAD SUFIAN CHE ABDULLAH

DR. MARHANUM CHE MOHD SALLEH

MEGAT HIZAINI HASSAN

DR. NIK ABDUL RAHIM NIK ABDUL GHANI

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Corporate Information

AUDIT COMMITTEEDATO’ OTHMAN ABDULLAHChairman

MAHADZIR AZIZAN

SURAYA HASSAN

NOMINATION &REMUNERATIONCOMMITTEESURAYA HASSANChairman

DATO’ OTHMAN ABDULLAH

MAHADZIR AZIZAN

BOARDRISKCOMMITTEEDATIN SRI AZLIN ARSHADChairman

DAMANHURI MAHMOD

SURAYA HASSAN

INVESTMENT COMMITTEEDAMANHURI MAHMODChairman

DATIN SRI AZLIN ARSHAD

MAHADZIR AZIZAN

DATO’ SRI MOHAMED HASSAN KAMIL

COMPANY SECRETARYSHAMSUL SHAHRINA MOHD HUSSEIN(MAICSA7047477)

SENIOR MANAGEMENTDATO’ SRI MOHAMED HASSAN KAMILGroupChiefExecutiveOfficer

LEEM WHY CHONGDeputyChiefExecutiveOfficer

MOHAMED SABRI RAMLIChiefExecutiveOfficer,STMAB

JULIANA LO BENG LIEWGeneral Manager, Corporate Finance & Strategy

SIA MENG HUIChiefFinancialOfficer

SHUHAIBAHTULASLAMIAHHURMUZANGeneral Manager, Human Resource

PATRICK WONG CHANG YANGChiefInformationOfficer

AUDITORSPricewaterhouseCoopersPLT(LLP0014401-LCA&AF1146)Level10,1SentralJalan RakyatKualaLumpurSentral50706KualaLumpur

Tel :+603-21731188Fax :+603-21731288

REGISTERED OFFICETingkat26,BlokAnnexMenara Takaful MalaysiaNo. 4, Jalan Sultan Sulaiman50000KualaLumpur

Tel :+603-22681984Fax :+603-22742864Email : [email protected] : www.takaful-malaysia.com.my

REGISTRARBoardroomShareRegistrarsSdnBhd[199601006647(378993-D)]11th Floor, Menara SymphonyNo. 5 Jalan Prof. Khoo Kay KimSeksyen13,46200PetalingJayaSelangor Darul Ehsan

Tel :+603-78904700Fax :+603-78904670Email :[email protected]:www.boardroomlimited.com

PLACEOF INCORPORATIONANDDOMICILEMalaysia

STOCK EXCHANGELISTINGMainMarketofBursaMalaysiaSecuritiesBerhadon30July1996

STOCK CODE:6139

STOCK NAME: TAKAFUL

Strategic Review


Five-Year Financial Highlights

Group

Group

Group

Company

Company

Company

Total Family TakafulGross Contribution

Total General TakafulGross Contribution

Total Assets

GROUP(RM’000)

GROUP(RM’000)

GROUP(RM’000)

COMPANY(RM’000)

COMPANY(RM’000)

COMPANY(RM’000)

2,036,543

723,567

10,346,106

1,915,317

-

8,228,497

‘15

1,04

4.69

2

1,21

5,50

5

1,24

6,25

6

1,60

8,15

7

2,03

6,54

3

‘16‘ 17 ‘18 ‘19 ‘15

928,

922

1,08

1,52

8

1,11

4,06

1

1,49

1,57

3

1,91

5,31

7

‘16‘ 17 ‘18 ‘19

‘15

476,

051

516,

651

587,

344

709,

286

723,

567

‘16‘ 17 ‘18 ‘19 ‘15

444,

525

493,

818

590,

993

313,

928*

-

‘16‘ 17 ‘18 ‘19

‘15

7,52

7,12

1

7,75

7,68

0

8,19

4,60

0

8,93

1,57

6

10,3

46,1

06

‘16‘ 17 ‘18 ‘19

* Jan - May 2018 only

‘15

7,05

3,53

7

7,22

1,01

6

7,73

3,82

0

7,11

7,88

8

8,22

8,49

7

‘16‘ 17 ‘18 ‘19

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Five-Year Financial Highlights

Group Company

Company

Group

Group

Group

Profit Before TaxationAfter Zakat

Dividend Paid(Net of Taxation)

EarningsPer Share

Return onEquity

Net AssetsPer Share

GROUP(RM’000)

COMPANY(RM’000)

COMPANY(RM’000)

GROUP(SEN)

GROUP(%)

GROUP(RM)

416,480

297,900

123,633

44.16

33.1

1.48

* adjusted for effect of share split.

‘15

203,

778

220,

632

252,

578

335,

983

416,

480

‘16‘ 17 ‘18 ‘19 ‘15

189,

537

229,

384

254,

522

256,

841

297,

900

‘16‘ 17 ‘18 ‘19

‘15

57,0

52

59,9

64

98,5

14

123,

472

123,

633

‘16‘ 17 ‘18 ‘19‘15

24.3

24.9

26.7

32.7

33.1

‘16‘ 17 ‘18 ‘19

‘15

0.84

*

0.89

0.99

1.19

1.48

‘16‘ 17 ‘18 ‘19 ‘15

19.1

3*

21.5

2*

25.1

3

35.7

9

44.1

6

‘16‘ 17 ‘18 ‘19

Strategic Review


Management Discussion & Analysis

Dear Shareholders,

Theglobalgrowthin2019recordedaninsubstantialpacesincetheworldwidefinancial crisisadecadeago,depictingparallelinfluences across countries and country-specific issues witha lowergrowth reflected inseveralkeycountriesand regions,including in the stressed economies, the newly industrializedAsian economies and the Gulf Cooperation Council (“GCC”).Over the course of the year, the global trade decelerated onthebackofaslowdown inglobal industrialactivityandtrade,resulted in rising tradebarriersanduncertaintiesonbusinesssentimentandactivityglobally.

Incertainadvancedeconomies,theuncertainglobaleconomicenvironment projected the inward bound of cyclical andstructural slowdowns. The macroeconomic stress due totighter financial conditions, geopolitical tensions and socialunrestderivingfromcountry-specificfactorsinlargeemergingmarketeconomiesfurtherroundedouttheimpedingscenario.

Theslowdowninglobalgrowthresultedcutinpolicyratesandresumed of asset purchases amongst large central banks.The lower interest rates and supportive financial conditionsunderpinned still-resilient purchases of nondurable goodsand services, which consecutively bolstered the consumerconfidence and household spending apart from boosting jobcreationintheadvancedandemergingmarketeconomies.Theinconsistentpaceoftheglobaleconomyhaselevatedconcernson accomplishing the advancement of the economic, socialandenvironmentaldimensionsoftheSustainableDevelopmentGoals(“SDGs”)inseveralregions.

TheMuslimeconomyinparticular,isoneoftherapidlygrowingeconomies worldwide despite uncertainties and a sluggishglobaleconomicslowdown.Theglobal IslamicfinanceassetssurpassedUSD2.0trillion,whiletheglobaltakafulgrowthgrewmoderatelyat4.0%duringtheyearunderreview.Drivenbytheexponential growth of the Muslim population demanding forShariah-compliantproductsandservices,theglobalhalalmarketis projected to reach USD9.7 trillion by 2025, approximatelymorethan20timesthesizeofMalaysia’seconomy.

The World Bank maintained Malaysia’s economic growth at4.6% in 2019, slower than 4.7% growth recorded in the yearbefore.Inviewofweakerexternaltradeperformanceandsofterdomesticdemandgrowth, theMalaysia’s realgrossdomesticproduct (“GDP”)growth isanticipated todeceleratebelow theGovernment’s forecastof4.8%to4.3% in2020.Despite tradediversion arising from trade tensions between the advancedeconomiesthatcouldmarginallybenefitMalaysia intheshortterm,theoverallweakeningofglobaltradegrowthwillcontinueto weigh on Malaysia’s export sector.

On the other hand, headline inflation in 2020 is projected toaverage higher than 2019 but remain modest. This outlookdepicts the lapse in the impact of consumption tax policychanges,theliftingofthefuelpriceceilingamidsttherelativelysubduedoutlookonglobaloilpricesandpolicymeasuresinplacetocontain foodprices.Theunderlying inflation isexpected toremainstable,cushionedbypersistentexpansionineconomicactivityandintheabsenceofstrongdemandpressures.

On the back of our ongoing digital initiatives, solid business expansion strategy, operational efficiency and

underlying financial strength, Takaful Malaysia doubled-down to record a sterling performance and registered record net profit with

double-digit growth. Advancing the industry over the years, we efficaciously accomplished our key business objectives in

delivering sustainable returns to our shareholders whilst meeting the consumer demand for innovative protection solutions.

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In the face of persistent headwinds facing the Malaysianeconomy, the domestic takaful industry continued to charterresilient growth across major business lines and anticipatedto maintain in surpassing its conventional counterparts with healthy growth momentum. Amid the evolving operatinglandscape,MalaysiantakafulindustryprovidedahugepotentialtofurtherstrengthenitspositionastheleadingtakafulmarketintheAssociationofSoutheastAsianNations(“ASEAN”).

The Family Takaful industry attained a significant growth intandemwith thestrongdemandofcredit-related takaful fromthebusinessgrowthofmortgageandconsumer loansarisenfromtheGovernment’saspirationtoachieve40%totalIslamicbankingassetstargetbytheendof2020andongoinginitiativesto spur the demand for protection amongst the consumers.TheGovernment’sBudget2020 initiative tosplit the tax reliefofEmployeesProvidentFund(“EPF”)contributionsandtakafulcontributionsare expected to increase thenational insurancepenetration ratewhilst taxpayers taking advantageof the taxreliefbenefits.

As at 31 December 2019, the Family Takaful industry’s newbusinessgrewby25%comparedto13%inthesameperiodayearago.TheFamilyTakafulsegment ispoisedtosustain itsrobust growth curve, taking into account of the low penetration rate, rising urbanization, escalating medical costs, ageingpopulationinadditiontostrongdemandintheIslamicbankingandfinancesector.

Correspondingly, the General Takaful industry recorded adoubledigitgrowthof21%comparedto9%inthesameperioda year ago on account of the progressive impact of the tariff liberalisationandmoderatingeconomicgrowth.Followingtheimplementation of Motor detariffication in July 2017, BankNegaraMalaysia(“BNM”)continuedincarryingoutassessmentsontheimpactofphasedliberalization.

TheGeneralTakaful industry isanticipatedtosoarasaresultof further liberalization, witnessing more innovative takafulsolutionswithcompetitivebenefitsandpricingwillbeintroducedto suit thediverseconsumerneeds.Moreover,well-resourcedtakaful industry players with robust risk-based pricingmodelwillhaveanadvantagetoregisterbetterunderwritingprofitandcompeteinadynamicmarket.

OUR KEY MILESTONES AT A GLANCE

Delivered a sterling performance and

recorded growth in net profit exceeding

the benchmark of RM300 million

with double-digit growth of 25%,

advancing the industry.

Recognized as the best digital initiative of the year to clinch

the ‘Innovation Award’ under the Special

Awards Category at the Malaysian Takaful Association’s Takaful

StarNite Awards 2019.

Sustained the market-leading

position in the Family Takaful business with

30% market share and maintained as

the second largest in the General Takaful business with 22%

market share.

Awarded the ‘Race for Cover Award’ at the Malaysian Takaful

Association’s Takaful StarNite Awards 2019

for the initiatives in promoting awareness

about takaful to Malaysians.

Clinched the ‘Highest Growth In Profit After Tax Over Three Years’

Award under the Financial Services Sector at The Edge

Billion Ringgit Club Corporate Awards 2019.

Selected for the second time as a

recipient of the ‘HR Asia Best Companies To Work For In Asia

Award 2019’ amongst the 50 corporations

from various industries under the Malaysia

edition.

Garnered the ‘Highest Return On Equity Over Three Years’ Award under the

Financial Services Sector at The Edge

Billion Ringgit Club Corporate Awards 2019.

Voted for the second time in a row as the

Top 5 for the ‘Graduate Choice Award – Best Employer Brand 2019’ under the insurance industry category.

Strategic Review


STRIVING TO STAY AHEAD OF THE CURVE IN A COMPETITIVE MARKET

TheMalaysiantakafulindustryremainedresilientandcontinuedto achieve an upward trend in 2019 for both Family TakafulandGeneral Takaful segments despite the cautious businesssentiment. The regulatory body along with the takaful andconventional industry players introduced and implementedvariousdistinctandcollectiveinitiativestofurtherpromotethedevelopmentoftheinsuranceandtakafulsector.

Focusing on providing innovative protection solutions fordiverse customers, including businesses and underservedMalaysians, Syarikat Takaful Malaysia Keluarga Berhad(“STMKB”or“theCompany”)anditssubsidiarycompanies(“theGroup”)efficaciouslytappedonthebuoyantperformanceofthetakafulindustry,supplementinganothersuccessfulyeartotheGroup’scontinuingdouble-digitgrowthsince2009.

On the back of our ongoing digital initiatives, solid businessexpansion strategy, operational efficiency and underlyingfinancial strength, Takaful Malaysia doubled-down to recorda sterling performance and registered record net profit withdouble-digit growth. Advancing the industry over the years,we efficaciously accomplished our fundamental businessobjectivesindeliveringsustainablereturnstoourshareholderswhilstmeetingtheconsumerdemandforinnovativeprotectionsolutions.

The key contributing factors that have driven our profitablegrowthwereprimarilyattributabletosolidperformance inourunderwriting activities, higher net Wakalah fee income andimprovednetinvestmentincome.Oursterlingperformancewasalso duly attributable to the active execution of our inclusivebusiness strategy on top of our digital transformation anddiversifieddistributioncapabilities.

Digitalisationremainedasthecatchwordinourefforttostrivein the competitive industry and stay ahead of the game.Werevolutionized our business operations and accelerated ourmarketpenetrationpaceviaourinnovativedigitalstrategyapartfrom adopting a forward-looking approach in our marketingstrategythroughdigitalandsocialmediaplatforms,alongthelinesofthefintechdemandinthefinancialservicessector.

Weconstantlyaimedatexceedingthecustomerexpectationsandmeetingourcommitmentsby innovatingourbusiness togenerate an excellent set of results and substantial increaseinprofitabilitytofurtheramplifytheGroup’sgrowthcurve.Themanagement remained steadfast in executing the followingbusiness strategic objectives, encompassing competitive initiatives and actions to attract and sustain existing and

potential customers, compete successfully, strengthen performanceandachieveourorganizationalgoals.

o Creatingvalueforallstakeholdersthroughdynamicandrobustmanagementofbusinessgrowth,profitabilityandfinancialposition.

o Pursuing growth and market leading position whilestaying true to the fundamental principles that haveshapedoursuccess.

o Deliveringagreatcustomerexperienceandmaintainingclose engagement with distribution channels andcustomersthroughacustomer-centriccultureinbuildingandupholdingcustomerloyaltyandsatisfaction.

o Implementing profound transformation to create thetakaful operator of the future by making great use of new and state-of-the-art technologies to accelerate thecreation of long-term economic value.

MAINTAINING MARKET-LEADING POSITION WHILST DELIVERING RECORD EARNINGS AND RESILIENT RETURNS

TherapidlygrowingmomentumoftheIslamicfinancialservicessector,particularlyintheAsiaPacificandtheGCCregion,owingto the large Muslim population and greater acceptance oftakaful products by both Muslim and non-Muslim presentedsignificant opportunities and conducive setting forMalaysiantakaful industrytoevolveandmaintainastablestanceaheadof the conventional insurance sector. Malaysia’s takaful growth continuedtooutpacetheconventionalinsuranceandexpandedat a rapid pace with the Government’s push for affordableprotectionplansandtheembracingofadvancedtechnologyasgrowth potential.

Against the favourable landscape of the Malaysian Islamicinsurance industry, Takaful Malaysia recorded an overallgrowth rateof19% innewbusinesswithan increaseby20%of theGroup’sgrossearnedcontributions forboth theFamilyandGeneralTakafulportfoliosduringtheyearunderreview.Asat31December2019, theGroupsustained itsmarket-leadingposition in the Family Takaful business capturing 30% of themarketshareandmaintaineditsstrongfootholdintheGeneralTakafulbusinessasthesecondlargesttakafulprovidersecuring22%marketshare.

Weachievedahighgrowthrateof27%forourFamilyTakafulsegment with total gross contributions of RM2.0 billion. Our sterling performance was mainly driven by advances in ourbancatakaful initiativesattributingtohighersales fromcredit-related products and steered by our strategic alliances withpremier Islamic financial institutions and dynamic networkin reaching out to civil servants for the mortgage and fire


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protection plans. Moreover, our sustainable penetration in the Employee Benefits (“EB”) segment by providing leading-edgevalueaddedservicesinadditiontoincreasedsalesviaourClickforCoverOnlineSalesPortal(“OSP”)furtherfortifiedourgrowthin the Family Takaful portfolio.

On the General Takaful business front, we remained as thetop two leadingGeneralTakafuloperators in the industry.WeimprovedourGeneralTakafulportfolioandregisteredtotalgrosscontributions of RM724million during the year under review,essentiallyderiving from the increase incustomeracquisitionvia our Fire and Personal Accident classeswhich resulted inhigherproductioninbothproductlines.Weachievedadoubledigitgrowthof40%forouronlinemotortakafulbusiness.

Takaful Malaysia’s excellent performance marked anothergreatmilestone for the Group as we recorded an impressivenet profit result, resulting in 10-year compounded annualgrowth rate (“CAGR”) of 28%. Evidently, we outperformed theindustry as a whole in accomplishing our business missionto exceed customer expectations through operationalexcellence, technology driven capabilities, product innovationand performance-oriented culture whilst delivering superiorshareholdervalue.

REGISTERING SOLID FINANCIAL PERFORMANCE

Group Performance

The Group’s operating revenue for the year under reviewcontinued its growth by 18% to RM3.12 billion as comparedtoRM2.64billionin2018.Theprofitbeforetaxationandzakat

(PBTZ) increased by 24% to RM417.7 million from RM337.0million in 2018. Theprofit after tax and zakat (PATZ) roseby25%toRM366.3million,increasedfromRM292.6millioninthepreviousfinancialyearcorrespondingly.

The registered growth in both the revenue and profit resultswasmainlyattributabletohighersalesgeneratedbythefamilytakafulandgeneraltakafulbusinessesinadditiontohighernetWakalah fee income arising from our overall sturdy businessgrowth.

TheGroupduringtheyearunderreviewcontinuedtomaintainits solid financial performance as a result of its digitaltransformationjourneyandoperationalexcellence,expansionofthedistributionchannelsinconsortwiththeintroductionofnewandinnovativetakafulsolutionsandservices.Wesuccessfullyachieved consistent profitable growth and expanded ourmarketreachduetoouractivemanagementstrategy,prudentinvestment,stringentunderwritingandsolidfinancialbacking.

Company Performance

The Company’s operating revenue rose 6% to RM2.22 billion,upfromRM2.09billioninthepreviousfinancialyear.Thetotalgross contribution registered an increase of 6% to RM1.92billion,comparedtoRM1.81billion in2018.The increasewasmainlydrivenbyhighersalesgeneratedfromthefamilytakafulbusiness.

Movingon to theprofitbefore taxationandzakat (PBTZ), theCompany recorded PBTZ of RM298.5million, an increase by16% as compared to RM257.4million in the same period ofthepreviousfinancial year.TheCompany’sPATZ recordedanincrease of 18% to RM270.7million fromRM230.1million inthe previous financial year. The increase in profitwasmainlyattributable to the increase in the net Wakalah fee income.

Review of Subsidiaries

Syarikat Takaful Malaysia Am Berhad (STMAB), the generaltakaful arm of Takaful Malaysia that manages the general takaful business registered the operating revenue of RM768million,PBTZofRM118.6millionandPATZofRM89.7millionduring the year under review as compared to the operatingrevenueofRM417.6million,PBTZofRM71.6millionandPATZof RM53.6million recorded for the seven-month period from1June2018to31December2018.Wesustainedourmarketshare in the general takaful business despite the challengingmarket environment.

Our Indonesian subsidiaries, namely PT Asuransi TakafulKeluarga (ATK) and PT Syarikat Takaful Indonesia (STI)remainedtobeimpededbythewindowconceptofpromoting


Strategic Review


Islamicproducts,predominantlybytheconventionalinsuranceplayers.

REVIEW OF THE STATEMENT OF FINANCIAL POSITION

Shareholders’ Equity

Shareholders’equityincreasedbyRM242.4milliontoRM1,254.5millionasat31December2019,netofdeclarationofdividendsofRM165.4millionduringthefinancialyearunderreview.Theincreaseismainlydrivenbytheupsurgeindistributableretainedearnings of RM199.4 million.

Total Assets and Total Liabilities

Asat31December2019,totalassetswitnessedanincreasebyRM1.4billiontoRM10.3billionascomparedtoRM8.93billionas at 31December 2018, particularly drivenby thegrowth inthe investment assets and increase in loans and receivablesexcludingTakafulreceivables.

ThevalueofinvestmentassetsaugmentedtoRM5.66billionasat31December2019incomparisontoRM5.40billionrecordedas at 31 December 2018. This is mainly attributable to the increase in investment in Islamic debt securities, InstitutionalTrustAccountandMalaysianGovernmentIslamicpaperswithno material change in the overall asset allocation.

Loansandreceivables,excludingTakafulreceivablesincreasedfrom RM1,354.5 million to RM2,630.7 million, mainly dueto higher placement in fixed and call deposits with licensedfinancialinstitutions.

On a separate note, the total liabilities registered an increasebyRM1.17billion toRM9.09billion in comparison toRM7.92billionasat31December2018,mainlydrivenbytheincreaseintakafulcontract liabilitiesbyRM1.13billion.Corresponding tothe Company’s business growth, the takaful contract liabilities increased from RM7.13 billion as at 31 December 2018 toRM8.26billionasat31December2019.

Capital Expenditures

Asat31December2019,weincurredRM5.1millionofcapitalexpendituresascomparedtoRM14.4millionduringthepreviousyear.Thecapitalexpendituresaremainlyfortheenhancementof our core systems, including purchase of software andcomputer equipment as part of the Group’s ongoing initiative indrivingitsdigitalagendatoenhanceandprovideaseamlesscustomer experience.

ADVANCING VALUE-BASED INTERMEDIATION (“VBI”) AS THE NEXT STRATEGIC DIRECTION

In developing and implementing our business strategy aimedat strengtheningour role and impact as a takaful operator inproviding Islamic insurance solutions to the consumers, wefocused on adopting practices, offerings and conduct thatgenerated positive and sustainable impact to the economy,community and environment, in line with our shareholders’sustainablereturnsandlong-terminterests.

Onthispremise,weunderpinnedthrustsofVBIalongwiththeimplementation approach and strategies in progressing VBIas the next strategic direction to provide unique propositionsfor Takaful Malaysia. Reflecting the true essence of Islamic insurance,weoptimizedourfullpotentialtoachievesustainablegrowth and competitive advantage by adopting the followingfundamentalcomponentsofourVBI.

o Transformation of our distribution model in providingdifferentiated and innovative online takaful solutions aspart of our key business strategy in spearheading theindustryasawhole.

o Implementation of business penetration and retentionstrategyasaprofessionalandleadingEBtakafulsolutionprovider in managing medical costs with across-the-boardvalue-addedservices.

o Adoptionofalong-termandforward-lookingapproachtoelevateourgeneraltakafulbusinessgrowthandincreaseinmarketpenetration formotorandnon-motorproductportfolios.

ENDURING A WIDE-RANGING BUSINESS PORTFOLIO APPEALING TO THE CONSUMERS

Malaysia’stakafulindustrycontinuedevolvingatacommendablegrowth rate, surpassing its conventional counterparts in the face of the continuedmarket uncertainty and external headwinds.The potential use of advanced technology in capturing theuntapped population segments and younger consumerswithgreater cost-effectiveness on the back of the Government’s pushforaffordableprotectionplansamongsttheMalaysiansatlargefurtherstrengthenedthefootholdofthetakafulindustry.

Takaful Malaysia continued leveraging on its market leadingposition in single contribution products whilst focusing onretail regular contribution products channeled via theGroup’sbancatakafulandonlinedistributionchannelstofurtherdiversifyitsbusinessportfolios.Wetappedonourestablishedstrategicbancatakaful partnerships with leading Islamic financialinstitutions by offering our innovative online takaful solutions viaourClickforCoverOSPtothebankclientele inadditionto


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developing regularcontributionproducts formarketingbyourbank partners.

Additionally, theGroup introduceda face-to-facedigital-assistpointofsalessystemequippedwithasmartunderwritingenginefor its premier bank partners to promote andmarket simpleprotection plans directly to their customer base. Facilitatingtransactions conveniently, the face-to-face marketing via mobile devices provided our bank partners with straight-throughpaperless processing through an automated underwriting inmeeting the ever-rising consumer expectations.

In preparation for the implementation of the new accounting standard,Malaysian Financial Reporting Standard 17 (“MFRS17”), theGroup concluded its strategic planningprocess, gapanalysis, consultant engagement, transition impact analysis anddetailedroadmap,apartfromestablishingaprojectsteeringcommitteeandput inplacegoodgovernanceandplanningaroutetoensuresmoothimplementationduetothewide-rangingimplications on actuarial and accounting systems, financialreporting,productdesignandfinancialstatementstotaxationand operations. Representing a significant transformation ininsuranceaccountingrequirements,theMFRS17isscheduledfor full implementation from January 2022.

Thetakafulindustryalsowitnessedacontinuingimplementationof key initiatives by BNM under the Life Insurance andFamily Takaful Framework (“LIFE”). Updated with wide-ranging changes, the investment-linked product (“ILP”) policysignificantly impacted the ILP industry, ranging from productdesigning to implementation of sustainability requirementsandproductdisclosure inprovidingbetter valueandenhancetransparency to the consumers apart from ensuring high standardsofgovernance.

The escalating medical inflation and competitive EB marketremainedachallengingoperatingenvironmentfortheindustryplayers.TheGroupthroughitsprudentunderwritingphilosophyto better manage the risks of high medical inflation andinadequatepricingcontinuedtoshapeoursuccessinsustainingprofitablegrowth.Weretainedourcorporateclientsthatvaluedthe professional services in managing their EB programs inthemostcosteffectivewaystoachievestablemedicalcosts.TakafulMalaysiaalsoreinforceditsbrandingasaleadingandprofessional EB player in the market by offering innovativevalue-addedservicestoitsEBcorporateclientsinpromotingahealthyandproductiveworkforce.

During the year under review, we intensified our penetrationstrategy through our distribution network by reaching out tomore civil servants to market our mortgage takaful cover for the housingloanprovidedbytheLembagaPembiayaanPerumahanSektorAwam(“LPPSA”).

Moving on to our General Takaful business, Takaful Malaysia introduced comprehensive engagement programs for its keynon-motor corporateagency force in securingandsustainingprofitable business accounts. Even though corporate agencyrecruitment and retention remained a challenge, the Groupcontinued rendering its corporate agency force with thesupportsneededviaproduct enhancementsandvalueaddedservices in addition to sanctioning superior underwritingcapacityforselectedprofitablelargenon-motoraccounts.

WetacticallyenhancedourSMEproductofferingtoprovideacompetitiveand innovative takaful solution inorder to furtherpenetratetheSMEmarketandincreaseourmarketshareintheGeneralTakafulbusiness.AimedatprovidingauniqueapproachtoprotectSMEbusinesses,thisproductofferedacustomizableprotectionplanbasedondiversebusinesssegmentstosuitthefinancialcircumstancesandneedsofSMEs.


In the face of the competitive market environment, Takaful Malaysia achieved a commendable progress via its GeneralTakaful arm, particularly through its onlinemotor distributionchannel,ClickforCoverOSPthatwitnessedaquantumleapingrowthsince the launch in2018.Wecontinued indevelopingand enhancing our digital ecosystem to support our onlinedistribution strategy by adopting a pricing segmentationapproach to target customers with an improved claimsexperienceforourmotortakafulproduct.

Strategic Review


EXPANDING DIGITAL FOOTPRINT AS THE DRIVER OF INNOVATION AND COMPETITIVE ADVANTAGE

In positioning Takaful Malaysia at the forefront of the digitaltransformationintheIslamicinsuranceindustry,wereinforcedourdigitalsolutionswhilsttransformingourbusinessstructurein meeting the customer expectations on the back of the evolving business landscape. The inevitable advancement offinancialtechnologyhasdrivenTakafulMalaysiainearmarkingsubstantialinvestmenttointegrateinformationandoperationaltechnologies inoptimizingperformance,drivingefficiencyandenhancing the quality of product offerings and value-addedservices.

Apart from the ongoing upgrading of our data centreinfrastructure to support the Group’s growing business, we implemented new infrastructure capabilities to increaseproductivity, improve sales and turn-around-time (“TAT”) ontopof reducingouroperatingexpenses,corresponding toourdigitalagendatoexpandourmarketshareinboththeGeneralandFamilyTakafulbusinesses.WesuccessfullymigratedourformerTakaful IntegratedSystem (“TIS”) coreapplicationandinfrastructure to a new sustainable platform in keeping with currenttechnologiesandgainingbetterbusinessvalue.

Takaful Malaysia accomplished another significantmilestonein its journey of innovation with the launch of our chatbot, Tamara.Wehavemadesignificantinvestmentsinbringingthebest of technology as part of our digital strategy to bemoreeffective in servicing our customers.We aimed at enhancingour customer experience by delivering a differentiated andseamlessexperienceofcustomizedservicestotheconsumers.Theintroductionofourartificialintelligenceprovidedrealtimeresponse to enquiries related to our OSP products, No ClaimDiscount(“NCD”),certificatematurity,windscreenconfirmation,statusofbenefitpayoutsandmanymore.

scenarios. This implementation has not only significantly improved customer experience, but also providing seamless payment options for our customers whilst keeping our internal processes smooth, organized and secure.

Our strategic move to make our digital strategy the driver of our innovation, competitiveness and growth is part of our ongoing efforts in streamlining our procedures and operational efficiency. Recognizing the convenience of access to on-demand information, the Group also launched a tablet friendly web application for its bank partners and intermediaries as part of our face-to-face marketing initiative to promote and provide the online experience via in-person communication to give potential customers detailed explanations and walk-throughs of our Click for Cover OSP.

In our continued efforts to drive our digital agenda in providing an integrated multi-channel experience to our customers and corporate agents, both our customer and corporate agency online portals, myTakaful Customer and myTakaful Corporate Agent respectively witnessed a facelift and design updates. The new updates offered an enhanced online experience and made it easier for users to access the primary features and information available online apart from providing a better support for the tablet format when accessing the portals via mobile devices.


DIVERSIFYING OUR ARRAY OF INNOVATIVE TAKAFUL SOLUTIONS Providing enhanced and new range of productswith cutting-edge features in the market targeting profitable customersegmentswhilstaddressingtherightunmetprotectionneedsof the consumers remained as a top agenda for TakafulMalaysia todelivergrowth for theGroupand inspearheadingthe industry. Recognizing the fact that the consumers in thepresent day expecting takaful and insurance providers toconstantlyenticethemwithnewandbetterprotectionsolutions,the Group diversified its tranche of takaful solutions via itsproductinnovationstrategybyintroducingnewprotectionplanstargetingdifferenttargetsegmentsthroughmultipledistributionchannels.

Enhancingtheaccessibilityandconvenienceforourcustomersin making online payments, we successfully implementedmultiple payment gateways catering to all types of payment

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In our continued efforts to provide awider portfolio of onlineproductmixcateringtotheever-risingcustomerexpectations,Takaful Malaysia introduced Takaful myClick Term, a comprehensive term plan via its online sales portal, Click for Cover that provided death/total and permanent disabilitycoverage with an optional critical illness benefit covering 39critical illnesses. Comes with a real-time automated medicalunderwriting assessment to provide an instant underwritingdecision, our customers are enabled to enjoy a high levelof protection up to age 80 years with a monthly contribution payment option.

Correspondingtotheescalatingmedicalandhealthcarecostsover the years that has significantly raised concerns amongtheconsumers,welaunchedaregularcontributionstandalonecritical illness takaful plan, Takaful myCI Cover which pays a sumcoveredupondiagnosisofanyof the39coveredcriticalillnesses.With coverage term options of 10 and 20 years tochoose from, this product is made available via our directdistributionchannelwherebyourcustomersmaywalkintoanyof our Takaful myCare Centres within their vicinity to enrol in this protection plan.

Takaful Malaysia also developed two new takaful solutions,Takaful myPlus PA and Takaful myAngkasa PA specificallyfor distribution via our telemarketing distribution channel.ExclusivelyofferedtoBankIslamcustomers,TakafulmyPlus PA provided personal accident coveragewith additional Hajj andUmrahbenefitsinadditiontoAviationPersonalAccidentcover,Badal Hajj andHospital Income benefits. TakafulmyAngkasa PA is a personal accident takaful plan that covers death duetoaccidents,regardlessroadaccident,snatchtheftordengue.CateringformembersofBiroAngkasa,thisplanpaysadoubleaccidental death benefit if death is due to snatch theft ordengueortentimesoftheaccidentaldeathbenefitifthepersoncoveredsustainedanaccidentthatcausestotalandpermanentdisability.

Aimedatdeliveringadifferentiatedexperiencetothecustomersvia our corporate agency distribution channel, we speciallydesignedTakafulmyTravel Umrah, a protection plan to cover the pilgrimsperformingUmrah.Thisplanwhichissolelydistributedbytravelagencieswhohavesignedupasourcorporateagentsprovidedaworry–freepilgrimagecoverageagainstthepilgrim’saccidentaldeath,permanentdisabilityandcoverstheexpensesofemergencyhospitalizationincludingmedicaltreatmentsandtravelconveniencesduringtheirstay intheKingdomofSaudiwhile performing Umrah.

Operating in today’s challenging and dynamic environmentmaking it essential for small-to-medium enterprise (“SME”)businesses to protect their assets, liabilities and employeesagainst financial or asset losses. As part of our product

development strategy to increase the awareness andimportance of insurance as a necessary investment amongst theSMEsandfurtherpenetratethemarket,wecameoutwithaniche protection plan, Takaful mySMEcoveringawidespectrumofSMEcustomersfromsmallsingleofficepremisestomulti-dimensional retail companies. This plan provided a needs-based customized solution for business protection and ourSMEcustomerscouldopt for thecoverageneededand tailorthe limits as well as extensions of cover to meet their business requirements.

PRESERVING INVESTMENT PERFORMANCE TOWARDS ACHIEVING LONG-TERM RETURN

Theglobalgrowthdeceleratedmarkedlyin2019withcontinuedsoftnessinglobaltradeandinvestmentaffectingtheadvancedeconomies, particularly the Euro Area and emergingmarketsaswellasdevelopingeconomies.Onthedomesticfront,BNMthrough its pre-emptive measure scaled down the OvernightPolicyRate(“OPR”)by25bpsinmitigatingtheslowingeconomicgrowth.

Duringtheyearunderreview,Malaysia’sgrossdomesticproduct(“GDP”) registered a growth of 4.3%, mainly led by strongerprivate consumption. Despite the domestic and externalheadwinds, Malaysia’s economic fundamentals remainedresilient, althoughdraggedbysupplyshocks inagricultureaswellasdecliningoilproductionandcompoundedbymoderationin the manufacturing activity. In managing risks and return amidst market challenges, werationalizedourinvestmentpoliciesaccordinglyandcontinuedtactically implementing prudent and vigilant investmentstrategies.TheGroupinconsultationwiththeBoardInvestmentCommittee positioned its strategic asset allocation towardsachieving the long-term returnwhilstminimizing the volatilityandvalueatrisksofthemanagedportfoliosinaugmentingitsoverall investment performance.


Strategic Review


Wecontinuedwithourstrategicassetallocation, focusingonassetclassesthatprovidedastableandpredictablerecurringincome, namely Sukuk and money market instruments. Inline with our strategic asset allocation, our equity exposure remained low throughout the year under review, limiting theimpact of equity market volatility. As a result of our prudent strategy addressing the marketchallenges,2019witnessedanimprovementintheCompany’sinvestment income underpinned by better performancefrom Sukuk portfolios capitalizing on the low interest rateenvironmenttorealizesomegainsfromexistingholdings.

While there were some volatility in equity portfolio performances asaresultoftheoverallmarketconditionlocallyandglobally,the volatility have been cushioned by low asset allocation inequityandtheperformancesofotherassetclasses.Ourdepositinstrumentsalsocontinuedtoregisterhigherincomereflectiveof the higher asset allocation into these asset classes as we remaineddefensiveconsideringtheuncertaintiesinthemarket.

DELIVERING SUPERIOR SHAREHOLDER VALUE

In tandem with the Takaful Malaysia’s position as a leadingIslamic insuranceplayer and its capabilities in growing sales,earnings and cash flow, the Group successfully deliveredsustainablevalue to itsshareholders through robust, superiorearnings and resilient returns during the financial year underreview.

Wemaintainedindeliveringlong-termshareholdervaluein2019byproducingahealthyreturnoninvestedcapitalandgeneratingprudent value-driven investments through consistent andreliable execution of our business strategy as well as market resolutions.Werecordedasubstantial increase inprofitabilitytodeliversustainableandsolidfinancialresultsinkeepingwiththeexpectanciesofourvaluedshareholders.

Takingintoaccountofoursterlingperformanceduringtheyearunder review, theBoardofDirectorsdeclaredon3December2019 an interim single tier dividend of 20.0 sen per ordinaryshareamountingtoRM165,358,467inrespectofthefinancialyear ended31December2019whichwaspaidon2January2020.

This translated into a dividend yield of 3.5% based on theCompany’s share closing market price of RM5.70 as at 31December2019.The interimdividenddeclaredwith regard tothefinancialyearended31December2019,denotedapayoutratioofapproximately45%of thenetprofitgenerated for theyearended31December2019.

DEFINING THE TAKAFUL MALAYSIA BRAND

InamplifyingapositiveTakafulMalaysiabrandimageamongstthe consumers to bring in consistent sales and make ourproductroll-outsmoreeffective,weinterweavedourcorebrandmanagement in the Group’s business strategy, encompassing all touchpointswithourstakeholders.This long-termsustainablepolicyhasmadeitpossibleforusincomplementingvaluetoourtrancheofinnovativeproductofferingsandservices.

During the year under review, we tactically leveraged on thedigital and socialmedia platforms to reinforce ourmarketingefficacy and brand engagement with the consumers.Recognizing the significance of positioning our brand in themarketandtheprevailing influenceofourbrandoncustomerengagement,weaggressivelyembarkedondigitalbrandingandmarketing campaigns via our strategic partnerships with global ITsolutionsandconsultancycompaniesinreachingouttotheMillennialsandthesocialmediausers.

Ourstrongbrandpresenceintheindustrycertainlydistinguishedusfromtheindustrypeersandcreatedbrandaffinityinkeepingthe Takaful Malaysia flag soaring above the rest. We further intensifiedtheTakafulMalaysiabrandthrough innovationandcreativityviacost-effectivemarketingandstrategicadvertisinginitiatives in upholding the Group as the preferred choice forinsurance amongst the consumers. During the year underreview, Takaful Malaysia continued rewarding the individualcustomers as well as corporate clients of its selected arrayofproductsandpaidoutatotalofRM9millionformakingnoclaimsduringtheperiodofcoverage.

ACCOMPLISHING SUPERIOR OPERATIONAL COMPETENCE

Driving operational efficiency through innovation in creatingvalueandachievehigherproductivityisalwaysatthefrontlineof our strategic differentiation. We continued in aligning ourresources through the enhancement of the Group’s technology capability to deliver quality results and support its businessgrowth.

Takaful Malaysia embarked on a phased integrated digitaltransformation of its business operations during the yearunderreview,thereforereducingcostsandimprovingcustomersatisfaction overall. In sustaining a nimble and flexibleoperations,weskewedthestrategicprioritiesofourbusinessoperations towards achieving a stable operating environmentwhilst preserving our information security risk management.

TheGrouplaunchedacomprehensivesuiteofane-Submissioncapabilities tailored for its bank partners to make an onlinesubmission for mortgage and credit-related products that


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operated around the clock. Equipped with an innovativeunderwritingmodule,thee-Submissionthatservedasadigitalplatform for the processing of quotations via an e-Quotation engineandautoissuanceoftheacceptanceletterforsuccessfulonline applications effectively eliminated the requirement toproduceanddistributeprinteddocumentstoourbancatakafulpartners.

business process aswell as learning and growth. During theyear under review, the overall agenda of our human resourcestrategy consisting of the following fragments.

o Human Resource Management

u Conducting a series of inter division staffengagementprograminboostingproductivityandefficiency.

u Organizingacomprehensiveleadershipdevelopmentprogramcateredforpotentialleaders.

u Implementingan integrated talentawarenessandretention program in creating talent agility.

u Adoptingacohesivetalentmanagementframeworkby developing five layers of succession planninggroupings catering from top management to junior levelofficers.

1 LeadershipDevelopmentProgram(“L.D.P.”)

2 Leadership Development Program for HighPotential(“H.I.P.O.”)

3 Staff Talent Awareness & Retention Program (“S.T.A.R.”)

4 Leadership Intensive Talent EnrichmentProgram(“L.I.T.E.”)

5 ClericalDevelopmentProgram(“C.D.P.”)

o People-Related Priorities

u Enhancing workforce critical competencies

u Recruitingandretainingtoptalent

u Buildingasustainablehighperformanceculture

u Practicinggoodvaluehumanresourcestrategy

u Maintainingahighdegreeofstaffingcosts

u Providingcompetitiveemployeebenefits

u Rewardingexceptionalperformingworkforce

o Employer Branding

u Establishingstrategicpartnershipswithleadingprivatehighereducationinstitutionsnationwideviaon campus engagement activities.

u DistinguishingtheTakafulMalaysiabrandasthe employer of choice via all touchpoints as partofouremployerbrandingpriorityfortalentacquisition.

The growing penetration of diverse digital and paperlesstechnologies across businesses have invigorated the digitalpush for Takaful Malaysia to streamline its operations further. TheGroupautomatedthepaymentvoucherissuanceinvolvingits family operations and finance divisions via the integrationof internaldatabase foreffectivepaymentadministrationandprocessing workflow.

EMPHASIZING ON HUMAN CAPITAL DEVELOPMENT

Sustaining our competitive advantage as the preferredchoice of employer as one of the key drivers of our success,corresponding to our continued efforts in recognizing theemployeesasourmostvaluableassetbyemphasizingonthehumancapitaldevelopment.Investinginbuildinganadvancedculturebasedoncustomer-centriccorevalues,weestablishedthe right organizational culture to develop a sustainable andhigh-performingorganizationinlinewithourlong-termbusinessgrowth.

Wedeliberately aligned our talentmanagement strategywiththeGroup’sbusinessobjectivesandadoptedasystematicandintegratedtacticinmeetingtheGroup’svisionandmissionwhilstfulfillingtheneedsofourdiversestakeholders.Encompassingshared values and standards that contributed to our unifiedhumanresourceenvironment,weanalyzedourcurrentcultureinadditiontoidentifyingthestrengthsofourhumancapitalaspartoftheinitiativestakentomaximizetheperformancelevelandcompetencyofourworkforce.

Strategically initialed to meet the Key Responsibility Areas(“KRA”)ofalldivisionsacrosstheGroup,weskewedthehumanresources and sustainable development of our employeesconcentrating on the four core areas of financial, customer,

Strategic Review


Formorethanthreedecades,wehavebeennurturingMalaysiantalent in the insurance industry that clearly underscored ourunwavering commitment towards the development of theindustry.Wegarneredawardsandacknowledgements forouroutstanding perseverance in people management with highlevelsofemployeeengagementandcommendableworkplacecultures apart from the Group’s continued initiatives andsupportinpromotingtheinsuranceandtakafulindustry.

MANAGING OUR MATERIAL ISSUES

TakafulMalaysia remains exposed to the riskof underwritinglosses, which has an effect on its ability in writing new businesses. Often, poor underwriting practices and externalevents result in higher than expected underwriting losses.In order to limit the impact of such losses, TakafulMalaysiaensuresthatretakafularrangementsareestablishedinadditiontopracticingprudentunderwriting.

AsanIslamic insurancecompanyengagedintheprovisionoflong-term insuranceprotection,wecontinue tobeexposed totheriskofadurationmismatchbetweenourinvestmentassetsand financial obligations. Hence, we invest in high qualitySukukwithlongertermstomaturityandregularlymonitorthemismatchlevelaspartofourongoingstrategyinreducingthisexposure.Additionally,wecloselymonitorourliquiditypositionto ensure adequate liquidity to timely honour our financialobligations.

The Company continues to lead in Family Takaful business,with business mainly derived from the Credit-Related andGroup Employee Benefits products. As part of our ongoingefforts to sustain the Company’s market leader position, wehave diversified our product distribution by expanding ourdistributionchannels.TakafulMalaysiaalsoimplementsrobustand efficient business processes to sustain our preferredbusiness relationships with existing partners.

In view of the stiff competition faced by the General Takafulindustry under liberalisedmarket conditions,wemanage thisriskbyofferinginnovativeproductsandleverageonourdigitalstrategy to grow the business whilst enhancing customer experience. Significant investments in tools, applicationsand new technologies are made to improve our operationalefficienciesandprovideaseamlessserviceexperience to thecustomers.

On the back of volatile market conditions, Takaful Malaysiaremains exposed to the risk of investment losses. However,wemanage this by performing periodic reviews on the assetallocation strategy, cut-loss investment policy and havingminimumcreditratingrequirementsinplace.

The Company has a sound and robust Shariah governanceframework with emphasis placed on the roles of keyfunctionalities in ensuring the highest level of compliance with Shariah principles. Taking into account that non-compliance withShariahprinciplesmightresultinfinancialandreputationdamagetotheCompany,westrictlyadheretotherequirementssetbytheregulatorybodyconsistently.

PROSPECTS AND OUTLOOK

Amidthefragileoutlookandweakeningtradeandinvestment,theglobaleconomyispoisedforamodestreboundin2020andexpectedtorecoverto2.5%followingitsweakestperformancesince theworldfinancialcrisis.Despite the rise indebtandaslowdown in productivity posing challenges for policymakers,the emerging and developing economy growth is projectedto accelerate as some emerging economies recovering from periodsofstress.

Duetoweakerexternaltradeperformanceandsofterdomesticdemandgrowth,Malaysia’sGDPgrowthisexpectedtowitnessa drop, although trade diversion arising from trade tensionsbetweentheUSandChinacouldmarginallybenefitMalaysiaintheshortterm.Judgingfromtheconsumeranalyses,thelabourmarket is expected to remain stable and supportive of theconsumerspendingbehaviour trendswhilstheadline inflationnumberstorisemodestlytoanaveragebetween1.2%and1.7%,supposing the abolishment of fuel price ceilings to take place in 2020.

Given developments in the different sectors of the Islamicfinance industry and its surrounding ecosystem, Malaysia’stakafulindustryisprojectedtoregisteracommendablegrowthahead of its conventional counterparts. On the back of thelow penetration rate, rising urbanization, escalating medicalcosts and ageing population in addition to strong demand inthe Islamicbankingandfinancesector, the Islamic insuranceindustry is set to remainonapositivenote amidan evolvingoperatinglandscape.

Within the Malaysian Takaful Association sphere, the takaful operators have aptly crafted concerted efforts in enhancingawarenessontakafulandinprovidingprotectionplanssuitablefor every segment of the society. On that note, more initiatives will be carried out in 2020 which include strengthening theprofessionalism of takaful agents, intensifying awareness andinteractiveprogrammesfortheconsumersaswellastheintroductionofvaluepropositionsbyembracingtheconceptofvalue-basedintermediation.

The inevitable advancement of digital technologies in today’sworld will further induce the industry players to incorporatedigital capabilities into their business models and marketing


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approachestostaycompetitiveinthemarket.Realizingdigitaltransformation is crucial in optimizing costs and boostinginnovation amongst takaful operators, both digital and directdistribution channels will continue to be imperative in ordertoachieve theagilityandflexibility required, leveragingon thevarioustechnology-drivencapabilitiesoftheInternetofThings(“IoT”), Insurtech, Fintech, Artificial Intelligence, Big Data andRobotic Process Automation.

Theregulatorydevelopmentlandscapeofboththetakafulandinsurance industry in2020 ispoisedtofosterbetterbusinessconducts and ethics, through the adoption of new regulatorypolicy documents, including Investment-linked Business, FairTreatment to Financial Consumers, Operating Cost Controls for Life Insurance and Family Takaful Business, Outsourcing,Credit Risk and Risk Management in Technology as well asShariah Governance and Takaful Operational Framework.The implementation of the guidelines will further fortify thecorporate governance on business models and processesthat will eventually mitigate the risks that are impeding thesoundnessandwellbeingoftheindustryplayers.

Thecompetitivemarket environmentof theEBsegmentoverandabovetheescalatingmedicalinflationwilldrivetheindustryplayers to adopt strategic measures in staying ahead of thecompetitors and sustaining their market share. Embracingprudent underwriting philosophy in addition to offeringcompetitive pricing together with cutting-edge value-addedservices is fundamentallycentral tosustainexistingbusinesswhilst eyeing for potential clients to secure new business accounts.

In the past couple of years have been witnessing a notable growthintheinvestment-linkedproductportfolio,predominantlyfollowingthenewInvestmentLinked(“IL”)guidelinesintroducedbyBNMthathaveimposedmorerequirementsinmanagingtheILbusiness.InprovidingaconducivemarketforthesustainablegrowthoftheILproductsegment,theregulatorybodyinconsortwith the industry players is refining the product offeringsand sales practices in meeting the ever-rising consumerexpectations.

Thegeneralbusinesssegmenton theotherhand isexpectedto witness further developments as BNM will carry on withits assessment on the phased liberalization in determiningthe readiness of consumers and the industry for furtherliberalization. The dynamic market environment will resultin a stiff competition amongst the industry players that willeventually spur the introduction of innovative products andservices in order to register better underwriting profit andincreasethemarketpenetration.Additionally,relatedguidelinesandframeworksonoutsourcing,ITmanagementandcustomerdatamanagementareprojected tobe thekey focalareas forcompliancedevelopmentsin2020.

Gearing up for the year onward, takaful operators are in theview of influenced by an abundance of outlying concernsrelated to technology, talent, regulatory changes, distributionchannels,productdevelopmentaswellaspotentialmergerandacquisitionexercises.Adaptingtotherapidlyevolvingeconomyandconsumerdemands inaddition tocreatingvalue throughdigital transformation and disruptive innovation are identifiedamongthekeycomponentsinstayingaheadofthecurveinthecompetitiveindustry.

Looking ahead to 2020, Takaful Malaysia is optimistic withits positive outlook in expanding the Group’s market shareand endeavouring its journey of high performance to achievesustainable top and bottom line growth. Our goals arecomprised of several key strategies, specifically sustainingourmarket-leadingposition,growingournon-motorbusiness,maintaining our bancatakaful portfolio, amplifying our digitalstrategy,transformingourbusinessoperationsandpreservingour investment performance.

Onthatnote,wewillcarryonimplementingadvancedstrategiesthroughourongoingdigitalagenda, introductionof innovativeonlinetakafulsolutions,expansionofourdistributioncapabilities,strategic alliances with leading Islamic financial institutionscoupledwiththeadoptionofaninvestorrelationsprogramandmarketingtacticstoincreaseourbrandequity.

The Group will leverage on the healthy growth of its premier bank partnersinsustainingitsmarketleadershipinthebancatakafulbusinessportfoliothroughtheintroductionandimplementationof digitally-assisted marketing initiatives to further penetratetheretailconsumermarket.Refiningtheadministrationofourdistribution network for the Public Sector Housing FinancingBoard (“Lembaga Pembiayaan Perumahan Sektor Awam” or“LPPSA”) will continue to take centre stage in our businessstrategy by actively reaching out to more civil servants to increaseourbrandawareness.

In strengthening our market reach in the EB segment, theGroup will keep on embarking into digital solutions to offera differentiated experience of customized services for itscorporate clients. Takaful Malaysia will constantly improve its client engagement via service propositions to retain andgenerate profitable business on the back of the stiff marketcompetition.

On the General Takaful front, the Group will continue in striking therightbalancebetweenitsunderwritingmarginsandbusinessgrowth to further penetrate themarket and secure a leadingpositionamongstthekeyindustryplayers.

We are aggressively recruiting a new breed of conventionalcorporate agents for a quantum leap business expansion to achieve the top ten market position in the general insurance


Strategic Review


andtakafulsector,inlinewithourcontinuedeffortsinadoptingproduct innovations that serveasa catalyst inbolsteringourbusiness growth. For motor takaful business, we are exploring to penetrate into the motorcycle segment whilst maintaining our existing corporate agency force and adopting a pricingsegmentationapproachfortargetedgroupswithbetterclaimsexperiencetodrivegrowthofourmotortakafulbusiness.

Amplifying our tranche of innovative online takaful solutions, we will launch new protection plans on top of our comprehensive online takaful solutions via our Click for Cover OSP. As part of theGroup’s ongoing initiative to embrace the digitalmindset,TakafulMalaysiawillalsoembarkonanewdigitaltransformationjourneyby launching itsClickforCovermobileapplication.Byintroducing themobile app,wewill not only engagewith ourcustomersinreal-timeandprovidecutting-edgeonlineservicesbut also opening up a whole new business pathway.

Inmeetingtheexpectationsofourcustomerswhilstdeliveringsuperior shareholder value, we will continually assess ourinvestment strategy in achieving a stable and adequateinvestment yield whilst focusing on a disciplined expensemanagementtoaccomplishoperationalexcellence.Inordertostayconnectedwiththeconsumers,particularlytheMillennialsandthesocialmediausers,wewillintensifyourbrandpresencevia the social media platforms as part of our customerengagement initiative.

Wearebuildingasustainableandhighperformanceorganizationwithaninnovativecultureinthedigitalera.Ultimately,weaimatembeddingthecultureofagilityandinnovationtospurbusinessgrowth and improve customer experience. With structuredplanning, we will achieve greater alignment of our employees with the Group’s key strategies in taking our business to the next level.

ACKNOWLEDGEMENTS

ForTakafulMalaysia,theyearunderreviewhasnotonlybeenan eventful year, but also a productive one as we ended theyearwithanoutstandingoutcomeand resilientearnings.Oursterlingperformancemarkedanotherrecordbreakingyearforthe Group as we registered record net profit. What we havesuccessfullyachievedhasbeenremarkableandweprovedonceagainhowfundamentallystrongTakafulMalaysiaisdespitethechallenging market environment.

That’sfirstandforemostourconcertedeffortsandsuccess.OnbehalfoftheManagement, Iwould liketoexpressmyutmostappreciation to the Board of Directors and Shariah AdvisoryBody for their unwavering and valuable guidance. We trulyappreciate our valued shareholders and customers for theirtrustandconfidenceinTakafulMalaysiaasthepreferredchoiceforinsurance.Iwouldalsoliketoconveymydeepestgratitudeto all employees for going the extra mile and achieved ourbusinessobjectivesfortheyeartodrivetheGroupforward.

Wesincerelyvaluethecontinuedcommitmentandperseverancerendered, which have led to our stellar financial results andgrowthduring theyearunder review.Wehaveagoodmarketposition inourcorebusinessesandaboveallwehaveasolidfinancial foundation equipped with all-embracing strategiesto generate positive earnings and increase our growth curve.Wemust stay the course and do everything in our power toaccelerate themeasureswehave planned to accomplish ourbusiness objectives.

Itgoeswithoutsaying thatourongoingeffortsand initiativesareindeedessential–innovatinganddrivingourdigitalagenda,servicing our customers, pitching potential clients, providingservice supports, our success relies on all of us as a team. In takingourbusinesstothenextlevel,wemustexceedtheclientexpectations, meet our commitments, innovate in our business anddeliverexcellence.

Wehave thegreatestpassion forwhatwedoandapalpabledesire to do our best. For us, that means providing servicestoourstakeholderswitha levelofqualityandensure thatweinspireourconsumerswithuniqueexperiencesandexcitethemwith innovative takaful solutions. Together, let’s give our best inmeetingtheexpectationsofourcustomerswhilstdeliveringsuperiorshareholdervalueandkeeptheTakafulMalaysiaflagflying.

Dato’ Sri Mohamed Hassan KamilGroup Chief Executive Officer


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Sustainability Report

SCOPEThis Sustainability Report illustrates the sustainable development and performance of Syarikat Takaful MalaysiaKeluargaBerhad(“STMKB”or“theCompany”)anditssubsidiarycompanies(“theGroup”),encompassingourbusinessfunctionsand operations, strategies andmeasures during the financialyearunderreview.

The Group’s yearly Sustainability Report details its keyachievementsandmilestonesovertheperiodoftwelvemonths,reportingonthefivethemesofResponsibleFinance,InclusiveGrowth, Talent Development, Corporate Sustainability andEthical Practice. The scope of this Sustainability Report also coversthematerialsustainabilitymatterswhicharesignificanttotheGroupanditsstakeholders,namelyCustomerCentricity,Sustainable Growth, Digital Transformation, Regulatory Changes, Risk Management, Ethics and Compliance, OperationalEfficiency, Talent Management, Integrating Sustainability,CommunityEmpowermentandTechnicalExcellence.

Our Sustainability Report showcases the Group’s own initiatives andactivities togenerate long termbenefitsandensures thecontinuity of our business in a competitive market by integrating

sustainability as part of our strategy as well as assessment of areaswhereweneedtostepupourefforts.Wearecommittedtoprovidinganappropriatedisclosureandreportingapartfromenhancingour sustainability practices in order to achieve thesustainable growth that benefits our stakeholders and thecommunities as a whole.

REPORTING PERIODTakaful Malaysia has been reporting on its sustainability development annually since 2016. This Sustainability ReportdisclosestheTakafulMalaysia’ssustainabilitydevelopmentforthefinancialyearended31December2019.

REFERENCESANDGUIDELINESOur Sustainability Report was developed with reference tothe Bursa Malaysia Securities Berhad’s (“Bursa Malaysia”)SustainabilityReportingGuide,theUnitedNationsandMalaysiaSustainableDevelopmentGoals(“SDGs”),theGlobalReportingInitiative (“GRI”)StandardsandtheGroup’sownSustainabilityReport.

2019 KEY SUSTAINABILITY ACHIEVEMENTS

Market capitalisation

RM4.7 billion

Launchof Tamara,

anartificialintelligence(“AI”)chatbot

34 community-based initiativesand

RM548,189 investment in charity fund

Introductionof Takaful myClick Termand

Takaful myCI Cover via Click for Cover

Online Sales Portal

Developed Takaful mySME, aneeds-based

customizedsolution for SMEs

Clinchedthe‘Highest Growth In Profit After Tax Over

Three Years’AwardundertheFinancial Services Sector at TheEdgeBillionRinggitClub

CorporateAwards2019

Awardedthe ‘Innovation Award’undertheSpecial

AwardsCategoryatthe Malaysian Takaful

Association’s Takaful StarNite Awards2019

Receivedthe ‘Race for Cover’

SpecialAwardatthe Malaysian Takaful

Association’s Takaful StarNiteAwards2019

RankedastheTop 5 for the

‘Graduate Choice Award – Best Employer

Brand 2019’

Garneredthe‘Highest Return On Equity Over Three Years’ AwardundertheFinancialServicesSectoratTheEdgeBillionRinggitClubCorporate

Awards2019

Recipient of the ‘HR Asia Best Companies

To Work For In Asia Award 2019’

RM1.1 millioninvestment in

employee learning and development

RM3.4 millioninvestment in

IT infrastructure

Operating Revenue

RM3.1 billionTotal Assets

RM10.3 billion

Return on Equity

33%

Strategic Review



SUSTAINABILITYSTRATEGYGiven the greater attention, concentrating on how businesses impact the economy, environment and society, we constantly nurture a sustainabilitystrategy into our business operations by adopting a sustainable businessmodelintandemwithourkeyobjectiveofdeliveringlong-termvaluetoallourstakeholdersandthecommunitiesingeneral.Recognizingtheprominenceofsustainabilityinexpediting,underpinninganddrivingcorporateandsocietalvalue, we are committed to exploring innovative approaches in amplifyingoursustainabilityeffortstooperateinaneconomically,environmentallyandsocially sustainable manner.

AdoptingasustainabilitystrategyservesasanavenueforTakafulMalaysiatoassesstheGroup’sprogressthoroughlywhilstevaluatingandtakingintoaccountoftherisksandopportunitiesfacingitsbusinessfromvariousanglesanddifferentperspectives.Our sustainability strategyprovidesuswith theoutline to review, refine and emphasis on our unique propositions as a competitive advantage that differentiate theGroup from its industry competitors.Our sustainability strategy is revolving thefive themesofResponsibleFinance, InclusiveGrowth,TalentDevelopment,CorporateSustainabilityandEthicalPractice.

By incorporatingasustainabilitymindset inaccomplishingourbusinessobjectives,weare focusedon identifying,evaluatingandmanagingourmaterialsustainabilitymattersandopportunitiesthatareimperativetotheGroupandourstakeholdersasawhole.Inprovidinginnovativetakafulsolutionsandriskmanagementexpertisetofulfiltheever-risingconsumerexpectationsagainstthechallengingmarket environment, we continue to enhance our consciousness of the risks and opportunities associatedwith oursustainabilityconsiderations.

Consistent with our continuous efforts to make sustainability impactful and profitable for the Group, we continually align oursustainabilitystrategycorrespondingtoourbusinessobjectivesindrivingouroverallperformanceandgrowthapartfromengagingwiththestakeholdersacrossourbusiness.Wearecontinuallyimprovingthequalityanddepthofoursustainabilityinformationanddevelopmenttobetterservetheexpectationsofourstakeholdersatlarge.

SUSTAINABILITYAPPROACHOurapproachtosustainabilityembracestheintegrationofinnovativeeconomic,socialandenvironmentalbusinesspracticesthatisconsistentwithourmissionindeliveringsuperiorlong-termvaluetoourvaluedshareholders,customersandotherstakeholdersatlarge.WeareproactivewhenitcomestosustainabilitythatisessentialandintegraltoTakafulMalaysia’scorporatephilosophy.

Implementing sustainability instigates accountability and not only benefit us in identifying andmanaging risks, but also enabletheGrouptocapturenewopportunities.Thepracticeofprovidingoursustainability informationhelps inenhancingourcorporategovernanceandstakeholderrelationswhilstimprovingourbusinessreputationandbuildingtrust.

Takaful Malaysia’s approach to sustainability involves the following.

o Fosteringasustainabilitymindsetinthewayweconductourbusiness,encompassingtheessentialeconomic,environmentalandsocialkeyareas.

o Providinginnovativetakafulsolutionsandriskmanagementexpertisetowardshelpingpeopleachieveabrighterandfinanciallymore secure future.

o Embedding sustainability into our business strategy and set standards and frameworks to enhance our riskmanagement,amplifyourbrandvalueandreputation.

o Creating standards and guidance to provide consistent sustainability disclosures and reporting for improvement andtransparencyinconductingbusiness.

o Managingouroperatingfootprintinreducingtheimpactofouroperationstopreservetheenvironmentforfuturegenerationswhilstmeetingtheneedsofourstakeholders.

Sustainability Strategic

Framework

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SUSTAINABILITY BLUEPRINT

Related Sustainable Development Goals (“SDGs”)

Description

Supporthealthylivesandwell-beingfor all by offering inclusive takaful solutionsandservices

Promote lifelong learning opportunities for all

Upholdsustainableeconomicgrowthas well as employment opportunities

Fosterinnovationandbuildresilientinfrastructure to stay relevant in the market

Adoptfairbusinessandemploymentpractices

Providetakafulsolutionstoensureinclusive,safe,resilientandsustainable human settlements

Ensuresustainableconsumptionandproductionpatterns

Promote inclusive societies for sustainabledevelopment

• Sustainable Growth• Customer Centricity• Technical Excellence

• Talent Management• Technical Excellence• Community Empowerment

• Sustainable Growth• Digital Transformation• Talent Management

• Digital Transformation• Operational Efficiency• Customer Centricity

• Sustainable Growth• Talent Management• Community Empowerment

• Customer Centricity• Operational Efficiency• Integrating Sustainability

• Digital Transformation• Integrating Sustainability• Operational Efficiency

• Ethics & Compliance• Risk Management• Regulatory Changes

Sustainability Matters


Strategic Review



SUSTAINABILITYGOVERNANCE

Ourcommitment tosustainabilityderives from the topofourorganization and we have been consistently adopting thestructureofour sustainabilitygovernanceasdisclosed in theprevious reporting year.

The Board of Directors (“The Board”) comprises a numberof independent directors to safeguard the interests of ourstakeholders. TheManagement of the Group is spearheadedbytheGroupChiefExecutiveOfficer,whosupervisestheoverallimplementationofoursustainabilitypracticesinordertoachieveoperationalefficiency.

TheBoardhasdelegatedresponsibilitiestothefollowingBoardCommittees to facilitate the management and operation ofbusiness activities throughout the Group.

The Shariah Advisory Body of the Group consists of expertsin various fields that play a vital role in providing counsel tothe Board and the Management in order to ensure that weare conducting our business in accordance with the Shariahrequirementsandprinciples.

Our Group’s operations, affairs and activities are carried outin line with our Shariah Governance Framework as part of our ongoing sustainability initiative to comply with the Shariah requirements.

The detailed information of our Corporate Governance is setoutundertheCorporateGovernanceOverviewStatementoftheCompany’sAnnualReport,coveringtherelevantareas,includingRolesandResponsibilitiesoftheBoard,Directors’CodeofEthics,Corporate Disclosure Policy, Sustainability Policy, Directors’ Remuneration, Remuneration Policy Statement, ShareholdersaswellasAccountabilityandAudit.Pleasereferfrompage60untilpage75ofthe2019AnnualReportforfurtherdetails.

Risk Management

The Group has an Enterprise Risk Management (“ERM”)Framework in view of the value of institutionalised riskmanagement,whichencompassestheprocessofidentification,assessment,managementandreportingofrisksonaconsistentandreliablebasis.Infacilitatingarisk-alignedstrategicplanningprocessfortheGroup,wehaveinplaceRiskManagementandInternalControlthatisessentialinourdecision-makingprocess.

i. Managing Risk

Managing risk is essential to the sustainability of the Group’sbusinessanddeliveryofvaluetoshareholders.

We remain dedicated to continuously improving ourrisk management framework, systems and processesto ensure risks are beingwellmanaged andmonitoredthroughout the organisation.

The risks identified are managed through the ERMFramework, which sets out the key risk management processes of identifying, evaluating, monitoring andmanaging significant risk exposures arising from thebusiness operations.

TheGrouphasaRiskAppetiteStatementintendedtoguideandsupporttheGroupinordertothriveinanincreasinglydynamicandchangingbusinessenvironment.

ii. Embedding Risk Culture

Our ERM Framework distinguishes the significance ofbuildingastrongriskawarenessculturetobettermanagetheGroup’srisksefficiently.

AtTakafulMalaysia,ourriskculturestartsfromtheBoard

and cascades down to the Management and finally toall employees. We strongly believe that it is crucial to adoptaneffectiveriskmanagementsysteminvolvingourstakeholdersatallstages.

Inmanagingrisks,westrivetoadoptthefollowingconceptofthreelevelsofdefence.

(a) The first level of defence is the operational levelwhereby risk is first identified. Risk coordinatorsand/orHeadofDivision/Departmentsarerequiredto assume the responsibility of identifying andmanaging risks in their respective functions, as well as escalating significant potential risks toManagement Risk Committee (“MRC”) and BoardRiskCommittee(“BRC”).

AuditCommittee

Board Risk Committee

Nomination & Remuneration

Committee

Investment Committee

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(b) The second level of defence consists of RiskManagement Division (“RMD”) and MRC (formedby Senior Management). MRC will ensure thealignment of the Group’s business practices to the risk management policy, whilst the RMD will assist MRC and BRC in discharging its responsibilitiesbyprovidingoversight of the effectivenessof riskmanagement.

(c) The third level of defence is currently performedbytheinternalauditfunction.ItprovidestheAuditCommitteewithanindependentassuranceontheeffectiveness of risk management controls andfunctions.

MATERIALITYInrefiningandassessingawiderangeofsustainabilitymattersto identify what are imperative to our organisation and thestakeholders,we adopted amethodology andprocedurewith

MATERIALSUSTAINABILITYMATTERSAtTakafulMalaysia,weacknowledgematerialsustainabilitymattersbytakingintoaccountthepotentialrisksandopportunitiesinourbusinessactivitieswithregardtooursocialandenvironmentalneedsaswellastheeconomicfactorsimpactingtheIslamicinsuranceindustry. Identifyingandprioritizingmaterialsustainabilitymattersenableus indeterminingthesustainability issuesthatnotonlymattermosttousbutalsoourstakeholders.

Weconsideramaterialsustainabilitymatterassignificantifitimpactsourbusinessandoperationsintermsofgrowth,costs,risksandreputation.Correspondingly,anissueisalsodeliberatedasmaterialtotheGroupifitisequallyvitaltoitsstakeholders,suchasthecustomers,businesspartners,investors,employeesaswellastheGovernmentandregulators.

MaterialityhelpsustoupdatethedevelopmentofoursustainabilityonayearlybasisthatisalignedwiththeGroup’ssustainabilitythemesofResponsibleFinance,InclusiveGrowth,TalentDevelopment,CorporateSustainabilityandEthicalPractice.

the aim of achieving a sustainable business growth. Takaful Malaysia is also part of the Sustainability Steering Committee of itsholdingcompany,BIMBHoldingsBerhad(“BHB”)wherebytheSustainabilityWorkingGroupinvolvedinaperiodicdiscussionrelatedtotheGroup’ssustainabilitydevelopment.

CorrespondingtotheGroup’sinitiativetoenableitsstakeholdersinmakingbetterinformeddecisionswhilstfacilitatingeffectivestakeholderengagements,ourmaterialityprocessisstructuredby classifying the priority of the sustainability issues across our valuechain.Thisistoensurethatourstrategyisconcentratedonthetargetedareas,thusallowingusinprioritizingtheissuesapplicabletoourbusinessandstakeholders.

Applyingmaterialityhelpsusinidentifyingessentialmatterstoact on and to disclose. Our key considerations in embeddingsustainability into our business strategy and leveragingsustainability to reduce risksand takeadvantageofbusinessopportunities consists of the following stages.

Identifying and prioritizing material

sustainability matters

Managing material sustainability

matters

Communicating and providing sustainability

performance and disclosures

Strategic Review



Material Sustainability Matters Importance to the Group Importance to our Stakeholder Groups

Customer Centricity

• Serve as an underlying groundwork inconductingbusinesswithourcustomers

• Provideapositivecustomerexperienceatthepointofsaleandpost-sale

• Sustain customer loyalty, trust and repeatbusiness

• Driveprofitandgaincompetitiveadvantage

• Increase customer lifetime value via excellent customer service

• DeliversustainablegrowthandexpandtheGroup’s market share in the competitive market

• Buildtrustandloyaltyofthecustomers• Fulfillthediverseneedsofthestakeholders

Sustainable Growth

• Deliver profitable growth and superiorshareholdervalue

• Meet the expectations of customers, businesspartnersandotherstakeholders

• Expand market share via multipledistributionchannels

• Upholdstrongfinancial fundamentalsandcapital position.

• Meet the diverse protection needs of thestakeholders

• Provide financial security for any claimsrelatedmatters

• Manage the environmental impact by fostering responsible environmental protectionandstrategies

Digital Transformation

• Stayrelevantintheongoingdigitalrevolutionto meet the customer expectations

• Createvaluethroughdigitaltransformationanddisruptiveinnovation

• Focusedonprovidingan innovative rangeofproductstocomplementthedifferentlifestages of customers

• Leverage the technology to offer adifferentiated experience, customizedproductsandservicesaswellassimplifiedend-to-endengagements

• Constantlydevelopingprotectionsolutionswithahighdegreeofpersonalization

• Incorporate digital capabilities directlyintotheGroup’sbusinessmodeltoofferadifferentiatedexperience

• Cater to the needs of mobile-empoweredstakeholders

• Adopt digital transformation to keep upwiththefastpacedofinsurancetechnologydevelopment

Regulatory Changes

• Comply with regulatory, guideline, policyor procedure changes that are applicableto the Group’s business and the takafulindustry

• Implement regulatory compliance andadhere to laws, regulations, guidelinesand specifications relevant to the Group’sbusiness operations

• Offerproductsandservices thatmeet theregulatoryguidelines

• Maximize the long-term value tostakeholders by adopting the regulatorychanges with the Group’s products,businessandcorporatestrategies

• Ensureproducttransparencyanddisclosureto promote confidence in the financialservicesindustryamongstthestakeholders

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Risk Management

• Improve our risk management framework, systemsandprocesses that are essentialto the sustainability of the Group’s business anddeliveryofvaluetostakeholders

• Ensure risks are beingwellmanaged andmonitoredthroughouttheorganisationandoptimize risk and return, protect againstdownside risks and manage volatilityaround theGroup’sbusinessandfinancialresults

• Maximize value to stakeholders throughriskandbusinesscontinuitymanagement

Ethics & Compliance

• Promote sustainability within the business andthesocietyasawhole

• Adopt Shariah values and good ethicalpracticesinconductingbusinessacrossallorganizationallevels

• Conformtotheethicalpracticestoreduceorganizationalrisks

• Gaintrustandconfidencefromcustomerswith ethics and integrity in businesspractices in a fair and transparentenvironment

Operational Efficiency

• EnabletheGrouptoachievetheagilityandflexibility needed to remain competitive inthe market

• Streamline business operations through an integrated digital transformation andimplementanenhancedand innovative ITinfrastructure

• Align overall strategy to correspond withindustrychangesandtheevolvingdemandsof the customers

• Increase the efficiency of the Group’sbusiness operations to meet the requirements needed to offer excellentcustomer experience

• Correspond to the demands for greatertransparency, faster access to information and effective communication withstakeholders

Talent Management

• Maintain a skilled and efficient workforcefortheorganizationtoachievetheGroup’spriorityonthefourcoreareasoffinancial,customer, business process as well as learningandgrowth

• Increase employee performance, attract top talent and continuous coverage of criticalroles

• Empower to render good service to thestakeholders that serve as a competitiveadvantageoftheGrouptobethepreferredchoice for insurance

• Provide an equal employment opportunityto potential talent

• Achieve higher customer satisfaction

Strategic Review




Integrating Sustainability

• Generatepositiveandsustainableimpacttotheeconomy,communityandenvironment

• Createlong-termstakeholdervalue• Implement a business strategy that focuses

on the ethical, social, environmental, cultural and economic dimensions of the wayweconductourbusiness

• Commitment to sustainable business practicesasacompetitivedifferentia

CONTENTS...Menara Takaful Malaysia No. 4, Jalan Sultan Sulaiman 50000 Kuala Lumpur Tel : +603-2268...

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Transcript of CONTENTS...Menara Takaful Malaysia No. 4, Jalan Sultan Sulaiman 50000 Kuala Lumpur Tel : +603-2268...