What is the CAR for life insurance and family takaful sectors?

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Capital Adequacy Ratio Remains Strong for Life Insurance and Takaful Sectors

As of the end of December 2019, the life insurance and family takaful sectors in Malaysia reported a preliminary Capital Adequacy Ratio (CAR) of 207 per cent. This figure significantly exceeds the minimum requirement, standing at 1.6 times the mandated level.
Robust Capitalisation Provides a Buffer

The strong capitalisation observed in the life insurance and family takaful sectors is a key factor in the stable outlook maintained by RAM Rating Services Bhd for the Malaysian insurance industry in 2020. This robust CAR is anticipated to sufficiently cushion the potential impacts of heightened financial market volatility and increased capital charges, which are prevalent in an environment of low interest rates and mounting credit stress. This level of capitalisation suggests that the industry is well-equipped to absorb adverse market movements.
General Insurance and Takaful Sectors Also Show Strength

Beyond the life and family segments, the general insurance and takaful sectors also demonstrated considerable financial resilience. These sectors collectively boasted a CAR of 283 per cent as at the end of December 2019. This high ratio further underscores the overall strong financial health of the Malaysian insurance landscape, providing a significant buffer against economic uncertainties.
Investment Strategies Mitigate Market Risks

Despite prevailing economic downturns and volatile financial markets, most insurance companies have adopted conservative investment strategies. The bulk of their assets are invested in highly rated bonds, which are generally considered less risky. For instance, as of June 2019, the equity portfolios of the top 10 life and general insurers, representing a substantial portion of their respective industries by assets, constituted a relatively small percentage of their overall invested assets, at 15 per cent and three per cent respectively. This measured approach to investment helps to mitigate the risks associated with market fluctuations.

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What is the CAR for life insurance and family takaful sectors?

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