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RAM Ratings assigns AA3 rating to Syarikat Takaful Malaysia Keluarga’s maiden sukuk programme
Published on 14 Aug 2025.
RAM Ratings has assigned an AA3/Stable rating to Syarikat Takaful Malaysia Keluarga Berhad’s (STMKB or the Group) proposed RM1 billion Tier-2 Subordinated Sukuk Wakalah Programme (2025/-). The rating, one notch down from the Group’s insurer financial strength, reflects the sukuk’s subordinated status as tier-2 capital under Bank Negara Malaysia’s Risk-Based Capital Framework for Takaful Operators.
One of the largest takaful operators in Malaysia, STMKB has an entrenched franchise with over 20% share of the family and general takaful new business (NB) and gross contributions, respectively, in 2024. Within the overall life and family takaful industry, STMKB held a 10.3% market share of total NB in 2024, standing among the mid-tier players.
STMKB’s robust and growing earnings generation, consistent underwriting profitability and capital strength underpin its insurer financial strength. The Group’s top line is balanced, with slightly over half of its contributions from the profitable family takaful business which accounts for about 65% of pre-tax profit in the last three years. The Group’s core earnings are supplemented by steady investment income that generally contributes about 40% of the Group’s earnings. With a three-year average pre-tax return on assets of 3.9%, STMKB’s profitability is robust relative to peers’.
Both STMKB and STMAB possess solid capital buffers, with company-level capital adequacy ratios comfortably exceeding their respective individual target capital levels and the regulatory minimum of 130%. While the Group has no outstanding debt at present, the planned RM0.5 bil issuance under the proposed sukuk programme would result in pro forma financial leverage of 12%, a level that remains healthy in our view.
STMKB’s business profile, while well-regarded, is tempered by limited product diversification and a high reliance on single-pay products. Credit takaful for personal and mortgage financing extended by banks dominate 60%-70% of NB contribution. This product is mainly distributed by six bank partners and Lembaga Pembiayaan Perumahan Sektor Awam (LPPSA). The Group remains susceptible to fluctuations in NB volume stemming from its partners’ financing/lending activities in general. Further, as the proportion of single-pay product is high, STMKB’s current core earnings lack recurring revenue afforded by regular-contribution products. While STMKB has stepped up efforts to grow the latter in recent years, these initiatives will require time to gain traction.
Analytical contacts
Loh Kit Yoong
(603) 2708 8285
kityoong@ram.com.my
Sophia Lee
(603) 2708 8211
sophia@ram.com.my
Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
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Published by RAM Rating Services Berhad
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