PETALING JAYA: Allianz SE, Europe's biggest insurer, which failed in its last attempt to buy a local takaful operator in 2011, believes that it is not economically viable to enter into the domestic takaful market just yet, a board member told SunBiz. Manuel Bauer, a member of the board at Allianz SE, believes that growth in the Islamic insurance sector is beginning to cool down and would therefore be a struggle to justify any major investments to its shareholders. "We (Allianz) have looked into this takaful business and we could not make the economics fit yet. We have looked into a two-three years horizon for takaful and the economics we have found so far are not convincing," he said. Bound by Bank Negara Malaysia's restrictions that caps foreign ownership at 70% in a local insurers, he said, Allianz's is answerable to its shareholders if it decides to take certain acquisition risk. "If it was my decision alone, as 100% owner, and if I can foresee takaful to be market leader in 10 years, then yes, I can take the risk," "But shareholders would question us why did we spend so much in takaful company when you can pay us dividends. That is the dilemma we are facing. How to justify to our shareholders?," he said. Bauer also argued that the domestic takaful market has been stagnant and not performing as well as one thought it to be. "When I took the job as board member four years ago, I looked into the market and its development, I saw that it was already stagnant. We have noted this over the years," he said. Malaysia is the second largest takaful market in terms of gross takaful contributions, estimated at over US$2.2 billion as at end-2013. The takaful market in Malaysia, which is served by 11 takaful operators, has maintained its growth momentum in recent years at a compounded annual growth rate (CAGR) of 18.69% (2009-2012). Analysts had also forecast the takaful market in Malaysia to grow at a CAGR of 19.14 % over the period 2013-2018. With just 13% penetration rate for family takaful in comparison the 55% in conventional life, it was estimated that takaful sector captures less than 15% share of the total insurance industry. "Is takaful growing faster than conventional insurance? I don't think so. That is not the figures we are having," he said. Bauer said that taking into account Allainz's position in Malaysia as market leaders in both life and general business, the takaful potential figures are not convincing. "It is growing, yes, I agree, but the figures need to tie up economically," he said. Allianz Malaysia Bhd, the local unit of Allanz SE, has two subsidiaries Allianz General Insurance and Allianz Life Insurance In 2013, the Group's general insurance subsidy; Allianz General Insurance Company (Malaysia) Bhd maintained as the number one general insurer in Malaysia with a market share of 12.5%. It grew by 16.4% which is above the industry growth rate of 6.6% recording RM1.98 billion in gross written premium (GWP) last year as compared to RM1.67 billion in 2012. Its life insurance subsidy, Allianz Life Insurance Malaysia Bhd saw a 22.2% increase in GWP to RM1.60 billion last year from RM1.31 billion in 2012. Allianz Life holds the fifth position among the life insurance segment, registering a 7.5% market share. With commanding positions and healthy growth in the conventional insurance arena, Bauer said, missing out on a takaful business will not be felt. However, he added that Allianz would not neglect the takaful market completely. "Is it at all an uninteresting market? No. We are constantly looking into it every time. So far, nothing have materialsed," he said.