Why Great Eastern chose KATM as its partner?

Referring to previous article "Issuance of New Family Takaful Licenses" on 1st September 2010, many people are skeptical about Great Eastern's (GE) partner -- Koperasi Angkatan Tentera Malaysia (KATM). Given the other 3 new consortium which partner with banks, I am not surprise by those reactions.

To recap, the 4 new family takaful licenses:

1. AIA with Alliance Bank
2. Ambank with Friends Provident Fund (UK)
3. ING with Public Bank and Public Islamic Bank
4. GE with KATM

KATM, the country's Armed Forces multi-purpose cooperative, is however, no stranger to the insurance industry and it is a substantial shareholder of PacificMas with 16.4% stake. Meanwhile, Pacific Insurance Bhd is a wholly-owed subsidiary of PacificMas. (See picture below to see the GE-KTAM relationship)

Why with KATM?

KATM has 140,000 members which could be a huge market for GE to tap into. Another reason is that GE has to look into it's agents rice-bowl as well, if GE was to tied up with a local bank. Instead, GE dive into the 'blue ocean' where KATM is an untapped market of their existing agents. Other than that, this kind of partnership is well-isolated from political view, as KATM is not a company and it was not linked with government either.

Going forward...

Business Times had reported almost a year ago that Great Eastern had roped in former Prudential BSN Takaful Bhd chief executive officer Mohamad Salihuddin Ahmad to head its Islamic insurance operations.

Great Eastern would have a clear head-start compared to the other new takaful operators come next year and its reputation itself would give its an extra mileage.

Great Eastern is the largest insurance group in Singapore and Malaysia, with assets of S$48.5 billion (RM112 billion) as at February 10 2010 and 3.8 million policyholders in both countries.

On 30th August 2010, PacificMas saying it plans to sell its entire stake in Pacific Insurance Bhd to Fairfax Asia Ltd (Canadian company) subject to Bank Negara Malaysia's approval.