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KUALA LUMPUR, Jan 28 (Reuters) - Malaysian Islamic family insurer AIA AFG Takaful Bhd will more than double its workforce to 60 by year-end as it seeks a toehold in the world's second-largest sharia insurance market.
The insurer, is owned by the Malaysian unit of AIA and Alliance Bank , will add to its current headcount of 25 as it looks to become among Malaysia's top three family takaful providers within three years, its chief executive Wan Azman Wan Mamat said.
"The potential is that immediately a start-up company like AIA AFG Takaful will have access to a very strong distribution and that will be the differentiator for the company in terms of the growth potential," AIA Bhd chief executive Khor Hock Seng told reporters after officially launching the company.
Wan Azman said Etiqa Takaful, which is owned by Mayban Fortis, a joint-venture between Malaysia's largest lender Malayan Banking and financial group Fortis , is Malaysia's biggest Islamic family insurer with about 25 percent market share. Prudential is second with about 16-18 percent share.
"Increasingly bancassurance is going to play a major part of our business," said Alliance Financial Group's group chief executive Sng Seow Wah.
"With this tie-up, I hope to be able to extend beyond the takaful business with AIA to do other bancassurance products which will extend to businesses."
The Islamic insurance industry's growth has been held back by a shortage of sharia-compliant instruments that insurers can invest in and some doubts about whether takaful really complies with Islamic guidelines.
The takaful penetration rate in mostly Muslim Malaysia was only 10.9 percent in September 2010. The Southeast Asian country has the world's second-largest takaful market and its total assets of $3.2 billion accounted for 26 percent of total global takaful assets in 2009, according to central bank estimates.
AIA AFG Takaful is one of four takaful companies that received licences from the Malaysian central bank late last year as the authorities look to accelerate the industry's growth.
Total takaful contributions could reach $7.7 billion a year by 2012, Ernst & Young has forecast. But global takaful contributions are less than 1 percent of the total insurance premium spend annually, industry lawyers Clyde & Co have said.
Click on for more Islamic finance stories and for a speed guide Reporting by Liau Y-Sing; Editing by Kim Coghill