A Comparative Study on the Financial Performance Between Selected Takaful and Conventional Insurance Firms in Malaysia

This study assesses the financial performance of conventional and takaful insurance
businesses in Malaysia from 2016 to 2021, spanning a period of six years. The study
utilizes financial ratio analysis to examine important metrics such as solvency, liquidity,
profitability, efficiency, and underwriting performance across the two insurance
systems. The data from five conventional insurance companies and five takaful
operators is examined using descriptive statistics, Mann-Whitney tests, and panel data
regression to identify significant variations and associations that affect financial results.
The results highlight the different financial approaches and regulatory factors that affect
the relative success of conventional and takaful insurance in Malaysia. The findings
show that from the Mann-Whitney test, there are significant differences between the
takaful and conventional sectors in terms of solvency, underwriting performance, and
operating efficiency. From the panel data regression results, solvency and liquidity
ratios show a significant relationship towards profitability for takaful operators. At the
same time, for conventional insurance, only operating efficiency turns out to be
significant.