Assessing the Financial Performance of Takaful Operators in Malaysia through Return on Assets And Return on Equity

Abstract

Insurance and takaful are a convenient tool enabling people to plan towards savings and investments, as well as offering a kind of compensation for events such as death, disability and retirement. Malaysia's insurance market has developed to be one of country's most important economic drivers. (1) A variety of strategies are being introduced to boost the productivity of Malaysian takaful as well as move it into becoming a more profitable market, as evidenced by increased progress both for family as well as general business. (2) Therefore, the main purpose of this study was to evaluate the financial performance of Malaysian Takaful operators by employing dual financial ratios in terms of profitability which are Return on Asset (ROA) and Return on Equity (ROE). This research included secondary information of 15 Takaful providers associated with Central Bank of Malaysia between 2015 to 2019. (BNM). The findings had been determined by calculating the proportions for every Takaful provider's return on asset and equity ratios. Both overall score of return on asset and return on equity were observed to have favourable scores indicating that perhaps the majority of Takaful business are keen to optimally produce positive return through existing capital size. The findings of the study assist takaful companies to increase capital expenditure efficiency in order to generate more revenue.