MCIS Zurich Equity Strategy And Fixed Income Strategy

ECONOMIC AND INVESTMENT OUTLOOK 2008-2009
(MCIS Zurich Insurance Berhad)

Equity Strategy

Despite the negative return from equities over the financial year, the Malaysian market was
far from being the worst performing Asian market over the period. Looking forward, Malaysian equities are expected to extend recent negative price momentum on the back of a decline in fundamentals and the ongoing political uncertainty. In terms of market fundamentals, the poor earnings reported by most companies for the most recent quarter served to further weaken sentiment, and resulted in expectations for the next reporting season to be subsequently
downgraded. In an environment of weaker growth, earnings will no doubt come under pressure.
Despite these headwinds, in a valuation context (price to earnings valuations), equities are
trading close to lows not seen since 1997/1998. Similarly, on price to book valuation, the market is also attractively priced.


Fixed Income Strategy

A wider trade defi cit expected for 2008 will not be positive for the bond market given the potential supply of bonds to be issued to fund the deficit. The spread to corporate debt has widened on the back of the global sell-off in credit, and fears of an increase in the level of credit defaults. As spreads have widened, this has meant the capital value of the corporate debt securities has fallen. As confidence returns to markets, the spreads should compress to some extent. However, liquidity constraints are expected to persist until such time as sentiment rebounds. Whilst the current monetary policy setting is accommodative (as rates were not increased in 2008), the market is mixed in its assessment of the prospects for a rate cut in 2009 given the risk of slowing economic growth.

MCIS Zurich Insurance Berhad Strength In Fund

The Objective Of The Fund MCIS Zurich Insurance Berhad

MCIS ZURICH Balanced Fund is a diversifi ed portfolio consisting of equities, fixed income and money market instruments in various ratios with the objective of striving to provide the best returns and at the same time safeguarding against any negative development in the area of investment. It aims to have a balance between capital and income growth and appeals to conservative investors. While the focus will be on both equity and fixed income, the ratios of eachat any point of time would be dependent upon prevailing market and economic conditions.

MCIS ZURICH Equity Fund would focus more on investment in equity to attain medium to long term capital appreciation. Besides equities, this fund would also invest in money market instruments with the actual allocation to be based on prevailing market and economic conditions and technical factors. This is more for aggressive investors.

MCIS ZURICH Income Fund would focus on the objective of providing income distribution on a regular basis while at the same time preserving capital - basically to cater for risk averse investors. While the fund would be biased towards fixed income instruments it may also invest in money market instruments. Decisions on asset allocations and ratios will depend on the fund manager’s views of the local as well as global macroeconomic conditions.

MCIS ZURICH Jati Fund focuses on the needs of Muslim investors and is invested in accordance with Shariah principles in Shariah - sanctioned equities, money market instruments and fixed income instruments in various ratios depending on market and economic conditions prevalent at that point of time. However, this fund would be more biased towards investment in equities. This fund’s objective is to invest in companies that provide good prospects for capital appreciation over the medium to long term. Even though the Jati Fund is invested in Shariah- approved securities, the fund is not a Takaful product.

MCIS ZURICH Dividend Fund is to achieve a steady income stream with potential for capitalgrowth over medium to long term by focusing mostly on high dividend-yielding stocks and money market instruments.

Facts And History Of Establishment Of Companies MCIS ZURICH Insurance Berhad

Background Of MCIS Zurich Insurance Berhad

MCIS was established in 1954 and became MCIS Insurance in 1998. Market liberalization and the need to force entities to operate effectively in the global atmosphere causes combined with MCIS Zurich Financial Services, the fifth largest insurance services provider in the world who get to 59 in the Fortune ranking Globals 500 in 2005. Zurich Financial Services Group (Zurich) is based insurance company with a global network and its subsidiaries and offices in North America and Europe, the Asia Pacific, Latin America and other markets established in 1872 and headquartered in Zurich, Switzerland. This company employs more than 60.000 employees in more than 170 countries.


In 2004, they recorded a gross income of USD 49.0 billion in premiums and policy fees around the world also includes USD191.1 billion revenue from the investment group. Agreement with the merger between the company and is not only a combination of a strong even as the company puts MCIS Zurich local insurers with international standards. On this day, MCIS Zurich is proud to stand as a leader in general and life insurance with total assets exceeding 2.9 billion and gross premium income approaching 500 million. MCIS Zurich employs more than 500 employees and 5000 agents and operates through 26 branches located in the capital-capital and major cities.

4. Shariah Advisory Council MCIS Zurich MCIS Zurich Syariah Advisory Council consists of 5 members of the panel and have the expertise and experience in sharia as a complement to the insurance industry.

MCIS Zurich (MZ) is a conventional first insurance company in Malaysia with the Syariah Advisory Council. Shariah Advisory Council has a role to provide consultancy and advice to management, to research and development on various matters related to insurance through sharia perspective and take part in the exhibition and interact with 5000 employees MZ agencies throughout the country in an effort to raise awareness and ethics in selling products -insurance products.

The establishment of this council is also to welfare initiatives MZ 400.000 policyholders which 50% of customers are Bumiputera. MZ also aspired to enter the takaful market with the existence of the Council.

The Council is headed by the chair of Prof. Dr. Y. Bhg. Mohamed Yusoff bin Hussain of a figure in Islamic studies and philosophy. He holds the position of Mufti of the Federal Territory between 2003 and 2005 and currently serves as Rector of Kolej Islam Darul Ridzuan in Ipoh.
Members of the Council the other is Y. Bhg. Sohibus Samahah Dato 'Ismail bin Yahya, Mufti of Terengganu, Dr. Shofian bin Ahmad, of the contract law of Islam, Associate Professor Mostafa Kama bin Mokhtar, figures in Islamic studies and Tuan Haji Mustapha bin Md Nasir, a member of the board of directors MCIS Zurich Insurance Berhad.

MZ in terms of investment also offers four types of funds that MCIS Zurich Balanced Fund, Equity Fund MCIS Zurich, MCIS Zurich Income Fund, and MCIS Zurich Jati Fund. From four fund of funds only invested in accordance with Santa only the laws of justice, where it is invested in equities approved legislation, financial markets and fixed income securities in different proportions but is more likely to fund investment in equities. Other funds are not invested according to sharia which is partly invested in companies not listed in the list of sharia-compliant issued by the Securities Commission Malaysia.

MZ also earned income other than premiums paid by insurance buyers. Among them is the interest rate received from loans, accrued interest rates, interest rates of corporate debt securities and forex transactions. Clearly here the company comes from other income sources that interest rates clearly forbidden by Islam.

Referring to the Syariah Advisory Council established, it is not only as advisers for the purpose of sharia provide advice to management and to maintain ethical matters relating to workers MZ. In addition, they are also responsible for studies related to insurance from the perspective of sharia. However, the role and functions of the council is different from the role played by the Syariah Advisory Council takaful operator and Islamic banks because their function is to ensure travel operations, products and others are based on sharia and lawful. Unlike MZ core business which is clearly illegal. With the existence of the Syariah Advisory Council does not mean MZ is an Islamic insurance company.