The underwriter is to open a dedicated Retakaful operation in the Malaysian capital Kuala Lumpur alongside its existing traditional reinsurance office after being granted a composite licence from Bank Negara Malaysia to write Retakaful business.

Under the terms of the composite licence Swiss Re will be allowed to offer family and general Retakaful solutions to Takaful clients worldwide and it comes at a time when the interest in Takaful is rising.

The dedicated Retakaful operation is to be headed by Marcel Omar Papp, and, said the reinsurer, “signals a clear commitment to the development of this market”.

“Swiss Re has been offering family Retakaful solutions in the Middle East for the past three years,” said Mr Papp. “This new licence will allow us to consolidate and enlarge the scope of our efforts by also providing general Retakaful solutions.

“Takaful is set to grow and we look forward to deploying our expertise and capacity to meeting the needs of existing and new clients for Shari’a (Islamic law) compliant Retakaful.”

Under the Shari’a system the lack of adequate Retakaful capacity had enabled Takaful insurers to reinsure with the traditional market but there is now an increasing onus on Takaful underwriters to seek Retakaful capacity.

Swiss Re’s research arm, Sigma, released a study on Islamic insurance and reinsurance in 2008 in which it revealed that the average annual growth rate for Takaful between 2004 and 2007, was estimated at 25% (adjusted for inflation), versus 10.2% of that in the conventional market.

Takaful premiums of approximately £1.7 billion were written in 2007, and it is estimated that the global Takaful market could reach $7 billion by 2015. The 1.5 billion Muslims around the world, and also non-Muslims interested in the principles underpinning Shari’a-compliant products, represent a growing client segment for the insurance sector.