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International Journal of Academic Research in Accounting, Finance and Management Sciences

Open Access Journal

ISSN: 2225-8329

The Financial Performance of Life Insurance and Takaful Operators in Malaysia: A Lesson from the Health Crisis for Future Development

Faris Imadi Rosli, Nurul Syazwani Mohd Noor, Muhammad Azizur Rahman Ramli, Mohd Afiq Ab Jalil, Juliana Arifin

http://dx.doi.org/10.6007/IJARAFMS/v13-i4/19057

Open access

The Malaysian Takaful Association (MTA) and Life Insurance Association of Malaysia (LIAM) reports recorded a slow growth progression since 2016 to 2020 especially while COVID-19 hits the country. Therefore, this study aims to examine the trend of financial performance of life insurance and takaful operators in Malaysia during that particular period. Following the trend, this study specifically identifies significant determinants of both life insurance and takaful operators’ financial performance as reference in facing unexpected crisis in future. This study uses the panel data obtained from the audited financial statements of nine life insurance operators and five takaful operators in Malaysia ranging from 2016 to 2020. The regression model is estimated using random effects specifications involving the variables of profitability, leverage, solvency, firm size and the gross domestic products (GDPs). The study revealed that solvency is the only significant determinant of the life insurance and takaful’s financial performance before and during the COVID-19 health crisis. Either takaful or insurance players may improve their financial performance and be financially sound through solvency margin especially during the financial crisis. Thus, both operators need to determine how to respond to the implications of the unexpected health crisis strategically for future development. It is also found useful for effective risk management for both operators which may be included in the future research.

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(Rosli et al., 2023)
Rosli, F. I., Noor, N. S. M., Ramli, M. A. R., Jalil, M. A. A., & Arifin, J. (2023). The Financial Performance of Life Insurance and Takaful Operators in Malaysia: A Lesson from the Health Crisis for Future Development. International Journal of Academic Research in Accounting, Finance and Management Sciences, 13(4), 176–192.