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How The Pioneers In Islamic Finance Continue To Set The Standards

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Hussein Mohammed Salem Al Meeza, Managing Director & CEO of AMAN
Hussein Mohammed Salem Al Meeza, Managing Director & CEO of AMAN
Outspoken and prominent in the Islamic Banking and insurance industry, Hussein Mohammed Salem Al Meeza started his career in 1975 when he joined the world’s first fully fledged Islamic Bank, Dubai Islamic Bank. His landmark achievement was the establishment of Al Salam Banks. Al Meeza spoke to BUSINESS LIFE about his ongoing push to sustain a regulated industry.
Al Meeza started his career in 1975 when he joined the world’s first fully fledged Islamic Bank, Dubai Islamic Bank. His landmark achievement was the establishment of Al Salam Banks. Presently, he is the Managing Director and CEO of AMAN, Vice Chairman and head of the Executive Committee of Al Salam Bank Sudan, Vice Chairman and head of the Executive Committee of Al Salam Bank Algeria, Chairman of Amity Medical Services and member of the board of many financial institutions.

BL: What are your comments on the Islamic Financial industry?
Al Meeza: Taking into consideration my background in the banking sector, I concentrated in my speech at the WTC 2011 - Dubai on the Islamic Financial Industry. Amidst the prevailing financial crisis which impacted most businesses, I believe that the growth is still driven by the Islamic Banking mainly in addition to other supporting activities like the Takaful Industry.
For 2011, the outlook for the Takaful Industry is mixed. The Industry has enjoyed robust growth in the last few years, driven by favorable economic conditions, and the sector has shown indeed resilience to challenges during the financial crisis. Yet, the regulators along with the major players in the industry are invited to increase the outreach of the Takaful products and should definitely avoid just replicating the products and services offered by conventional insurers.
The UAE insurance market expanded 10 % in 2010 as it generated Dh20 billion premiums during this period. Similarly the Takaful portfolio grew by 10% in UAE totaling Dh2.2 billion for the same period.
During the last couple of years, takaful business has seen an unprecedented growth across various regions. Saudi Arabia, UAE, Sudan, Iran and Malaysia are the leaders in takaful. I strongly believe that the future of global takaful is bright given the growing awareness and demand for Islamic financial instruments.

BL: What are the latest news of Dubai Islamic Insurance and Reinsurance Company - AMAN?
Al Meeza: As you know, Aman is moving ahead and the growth in our business is stable and we just closed the year 2010 with a growth in our premium by around approximately 23%. For the second time in a row, AMAN announced distribution of 7.5% bonus share for the shareholders.
We maintained the level of liquidity similar to that of 2009. We seek stability of our liquidity level in such tough markets where the number of new Takaful operators is continuously increasing. There are approximately 60 conventional and Takaful companies and the fierce competition is pushing the rates to lower level every day.

BL: Does Aman have its own market share on which it builds its own growth?
Al Meeza: We are in the market and I think we should always concentrate to achieve our clients’ requirements and we thank God that Aman has an excellent reputation and a good vision. Aman has been awarded as the best takaful company and also we have just been awarded as the best Islamic provider company for the year 2011. We are looking forward to keep our high standards and also move in our mission as a Takaful insurance company especially that Takaful is a special type of insurance originating from the Arabic word Kafala, which means mutual guarantee. Takaful is an Islamic insurance concept which is rooted in Islamic muamalat, keeping in view the rules and regulations of Islamic Sharia.

BL: What about your new TPA Joint Venture company?
Al Meeza: Aman is venturing into the TPA business through its subsidiary company (Nowat Investment). We have established a joint venture with Agility from South Africa to form a company named AMITY to provide TPA services. Aman holds the majority shares in this new venture. We feel that the medical insurance is growing in the UAE, in the region and in the world. We feel that it’s a good time to have our own TPA company. It is an entirely independent company and the company was launched recently and it will be operating in the market soon.

BL: Hussein Al Meeza, Malaysia is having significantly lower claims ratios than the GCC. Is the Malaysian takaful industry more advanced than our industry?
Al Meeza: It’s not an issue to have Malaysia more advanced than us especially being a Muslim country. The Malaysian insurance industry is growing at a rapid pace with 12 percent projected growth in 2011. The Malaysian Takaful Association attributes this predicted growth to the expansion of the Takaful industry into rural areas of the country. There is a large interest in Takaful products. I think that Malaysians are more concentrating on their industry and also the Malaysian population is huge of 27.5 million. But Indonesia has the largest Takaful market growth rate with 67 percent. It is followed by Bangladesh with 58 percent and Saudi Arabia with 34 percent.
Malaysia is a great country and it is one of the leading countries in this industry.

BL: The name of Dubai Islamic Insurance and Reinsurance Company – AMAN indicates that the company works in insurance and reinsurance but in fact we noticed that currently Aman focuses mainly on the direct insurance, why?
Al Meeza: Aman is licensed to perform insurance and reinsurance operations but we didn’t activate the reinsurance side because age wise Aman is only seven years old. At the same time, we have a plan to view the financial issues and the financial problems affecting the world since 2008. At present, we are concentrating on our core business as an insurance company and we just postponed our reinsurance activities. We hope that shortly we can activate it; we are just waiting for this crisis to end.
As you know, usually we outline a 5 years plan but then we started planning only 3 years ahead and unfortunately presently we are working on a yearly plan due the market fluctuations.

BL:  Will the unfortunate recent Middle East events hit the region’s economy?
Al Meeza:  Definitely, it will impact the economy. At the moment, the region is very safe and very stable because the oil price is going up after the revolution in Libya which shut down production there. Libya exported about 1.5 million barrels per day 2 percent of global demand and mostly to Europe. Fears of tightening global supplies have helped push oil prices 33 percent higher since the middle of February.

BL: SGenerally speaking, GCC countries have great economic homogeneity and binding union, do you think that the recent events that took place in certain GCC countries might affect the rest of the GCC?
Al Meeza: Yes, the effect is there as you know and everybody is aware that the GCC is working as a group and they are trying to show the world that they have a strong unity working together. The entire GCC is helping Bahrain and Oman, I think this is a small turbulence and it will not affect at the end the region. The whole region is working safely and we have the confidence and the full support of the governments of the GCC countries. I think that this valuable support will help all sectors but this financial crisis definitely needs times and patience. The economy will pick up and recently we noticed that many sectors are slowly improving especially a lot of sectors like the tourism sector is vibrant in Qatar, Saudi Arabia and UAE.

BL: Hussein, the recent events have moved up sharply the oil prices. Do you think this indirectly will give an extra income to the oil producing countries like Saudi Arabia and many others?
Al Meeza: Definitely, I think there is a good impact and a bad one, oil prices will give us a surplus and at the same time people will worry about inflation. Governments should work hard to minimize the inflation in the region, and I think all governments are working on this issue and I think everybody had a hard lesson from the crisis and they are learning about the advantages and disadvantages of this crisis. I am convinced that things will move ahead and good days are ahead.

BL: How has Dubai survived and overcome the financial crisis?
Al Meeza: As we mentioned, we have never ever stopped thinking of how to improve our economy. Definitely, it will be a hard time plus I think our leaders are working hard to move forward through that turbulence but the economy is picking up and we are hoping that things will go back to normal. The United Arab Emirates has been one of the fastest growing countries. Definitely, we’ve been impacted by this brisk growth and we are hoping that it will come back to the right track. It is all about leverage of growth and potential opportunities.

BL: Do you think Hussein that the increase in the oil prices will lead to airfares rise?
Al Meeza: Definitely yes, because I think the oil prices will have a direct impact on fuel prices, which in turn will boost costs of other sectors as well especially the aviation and the ticket fares and cargo rates. I think that everybody is keen to minimize the impact of the inflation and all countries are keen on growth. I think things are moving in the right direction and I believe that the global crisis which impacted the whole world and we are part of the world.

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