As of June 2015, MAA Takaful, one of Malaysia’s 11 Islamic insurers, held MYR1.2bn (£208.8m, $306.7m) worth of assets – a 5% increase from a year earlier.
Zurich warned that despite regulatory approval there was “no guarantee that the acquisition will be completed” as it still needed the go ahead from MAA’s shareholders.
If successful, the buyout will give Zurich, Europe’s fifth biggest insurer, a foothold in the world’s second largest Islamic insurance market.
Takaful is an Islamic insurance system that complies with sharia law, in which money is pooled by all policyholders and then invested.
Under the scheme, takaful firms must follow strict religious guidelines, which ban interest, pure monetary speculation, and prohibits investments in industries such as alcohol and gambling.
Scale back in Asia
Meanwhile, the acquisition comes as Zurich looks to scale back its Asian operations, after profits slumped last year when its general insurance division was hit hard by the explosions at the port of Tianjin in China.
As part of a review of its business, the Swiss insurer announced in December 2015 that its International Life unit would stop writing new business in Singapore.
Middle East expansion
A move into takaful could allow Zurich to expand its businesses in the Gulf, which currently consists of offices in Bahrain, Qatar and the United Arab Emirates.
In December last year, the company said it will effectively exit its general insurance businesses in the Middle East by the end of 2016, but remained firmly committed to its life insurance and corporate reinsurance businesses in the region.