In a statement released on Thursday, the Swiss insurer announced that it has entered into a share purchase agreement (SPA) to acquire a 100% stake in MAA Takaful – a joint venture launched in 2006 between MAA Group Berhad and Bahrain’s Solidarity, which hold 75% and 25% respectively.
Under the agreement, Zurich will pay an initial $100m once the deal goes through, with the remainder being settled after three years.
MAA Takaful, one of Malaysia’s 11 Islamic insurers, reported $135.4m in gross earned contributions for 2015.
The announcement comes just a week after Zurich told International Adviser that the deal had received regulatory approval from Bank Negara Malaysia (BNM) and the Malaysian finance ministry.
The insurer warned that the buyout, due to be finalised in August, still needs the go ahead from MAA’s shareholders.
The transaction will not affect any existing Takaful contracts, said Zurich, as it will continue to service MAA’s customers.
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
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.
In December 2015, the Swiss insurer announced announced 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.
Last December, the company announced it will 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.