Investment strategy issues

Investment strategy issues

Source from http://takaful.info

Investment strategy in a Takaful company will depend on the underlying risks and expectations

The development of an investment strategy for a Takaful company varies by the nature of the liability. Normally the funds supporting the Takaful risks are kept separate from the funds representing the savings of the Takaful participant. The investment strategy for the savings fund would be dependent on policyholder expectations as well as any requirement to fund future risk contribution from the fund. There could be several savings funds corresponding to varying policyholder needs.

In the Takaful (risk) fund the investment strategy (for assets) is heavily dependent on the underlying risks (liabilities). Asset liability management applies here as it does for traditional insurance companies.

However, there are differences in the available asset classes, and particular investment within an asset class. It is vital that objectives and long term strategy be set for each fund, with proper monitoring of results against objectives.