By Rupinder Singh

Best Re plans RM480 million investment in two new entities that will provide general reinsurance and family re-takaful business.

Best Re, one of the world's largest leading Islamic reinsurance group, has moved its headquarters to Labuan and will invest RM480 million in two new entities that will provide general reinsurance and family re-takaful business.

Chairman Saleh J. Malaikah said the funds will be used to strengthen Best Re in Labuan and eventually help position Malaysia's as an Islamic financial hub.

The two entities incorporated here are Best Re (L) Ltd, capitalised at US$140 million (RM440 million), and Best Re Family (L) Ltd, at US$10 million (RM31.4 million).

Best Re - fully owned by Dubai-based Salama Group, which is the largest takaful group in the world - launched its first regional office in Labuan some 10 years ago, and currently, the branch accounts for around 70 per cent of its portfolio.

"By the end of this year, our gross written premium is expected to reach around US$350 million (RM1.1 billion)," Saleh told reporters at the signing ceremony for the RM480 million investment in Kuala Lumpur yesterday.

The event was also attended by Salama chairman Sheikh Khaled Zayed Al Nehayan, Labuan Financial Services Authority director general Datuk Azizan Abdul Rahman and The Financial Reporting Foundation chairman Datuk Ali Tan Sri Abdul Kadir.

Best Re's presence in Malaysia and specifically in the Labuan International Business and Financial Centre is a positive step towards turning the country into a leading Islamic financial hub.

The reinsurer aims to tap the expanding re-takaful market that has been growing 20 per cent annually and is expected to reach US$9 billion (RM28.3 billion) by 2020.

Its family takaful operation, which was launched in 2007, accounts for 4 per cent of its gross written premium.

The company achieved growth of 18 per cent in gross written premium to close RM304.7 million last year against US$258.8 million (RM813 million) in 2008.

The reinsurer's business profile is well diversified, both geographically and in terms of lines of business written.

"Prospectively, it is seeking to continue expansion of business in its traditional markets of Far East, Middle East, Gulf Corporation Council and Northern Africa.

"Banking on our reputation and knowledge of the markets, Best Re will continue to expand into new territories and increase the diversification of our business lines," said Best Re general manager Riadh Karray said.

Best Re's presence here will also create confidence for other global companies to view Malaysia as an ideal location and will potentially boost foreign investment.

Meanwhile, Abdul Kadir said there are a total of 167 insurers in the Labuan IBFC, which is embarking on an aggressive growth plan to become an established financial hub in the Asia Pacific region.

"Over the next five years, insurers in Labuan is expected to garner just over US$1 billion (RM3.14 billion) gross written premiums from US$417 million (RM1.3 billion) this year," he said.

The original news article appeared on the Business Times.