UNLISTED MCIS-Zurich Insurance Bhd, formerly known as MCIS Insurance Bhd,

is currently one of the top five insurance companies in the country

specialising in life insurance. It is also one of the top 10 companies in

general insurance, according to Life Insurance Association of Malaysia

statistics.

However, the company is not resting on its laurels. It could rank higher

in the future if it charts steady growth in profits and successfully

tackles the challenges that lie ahead.

After the successful merger in 2001 with its international counterpart,

German-based Zurich Asia Insurance Ltd, the company's chief executive

officer, Datuk L Meyyappan, believes the road to achieving the company's

goals will not be smooth.

He cites three areas of challenge for MCIS-Zurich and perhaps the other

insurance companies as well: increasing regulatory standards by the

government, swift changes in technology, and distribution of insurance.

`We need regulation but too much regulation slows down the imagination,'

he says. He feels that once there are too many regulations, management

would not be able to focus on making profits but instead would be engulfed

in finding ways to comply with the regulations.

However, Meyyappan stresses that he is not against the imposing of

regulations by Bank Negara Malaysia. MCIS-Zurich, he says, is adhering to

the law. The challenge for the company's management now is how to grow the

company within the regulated environment.

As for rapidly-changing technology, he says money would always have to

be spent on upgrading technology that becomes obsolete in a few months. He

says the company has been spending about RM2 million to RM3 million a year

on IT alone to keep pace with technology changes.

`We keep spending millions of ringgit on IT but we can never say the

investment is complete. We must keep investing and keep up to date with

the trends or we will be left out,' he says.

The final challenge for MCIS-Zurich, says Meyyappan, is the distribution

of insurance. He says initially, insurance was sold through agents who

dealt directly with customers. But today, banks and other financial

institutions are taking over the role. Therefore, insurance companies such

as MCIS-Zurich would have to compete with banks to survive.

He says MCIS-Zurich can tackle the challenges and is confident that the

appointment of Tan Sri Nor Mohamed Yakcob as Second Finance Minister would

be good for the industry as he understands the issues affecting it.

`This year we expect an increase in premiums of about 15% to 20% in life

products and 10% in general insurance products,' says Meyyappan. He

explains that the increase in percentage for the life insurance sector is

derived by multiplying the country's Gross Domestic Product (GDP) by

three. Thus, with a 5.5% expected GDP growth for Malaysia in 2004, the

company should have another good year ahead.

MCIS has been experiencing growth even prior to the merger. MCIS-

Zurich's chairman Datuk Mohamad Wahiduddin Abdul Wahab states in the

company's 2003 annual report that the company's outstanding performance

and ability to withstand external economic pressures through recent years

as well as deal with the changes resulting from the merger process was the

result of `clever and tactical leadership' provided by Meyyappan and his

team.

Meyyappan became the CEO of the company in 1995 and under his

leadership, the company's books have improved. In fact, the company has

been experiencing steady profit growth since 1999. Its turning point was

its merger with Zurich Asia Insurance, which now holds 40% in MCIS- Zurich

while Koperasi MCIS Bhd holds 43.69%.

The merger has boosted MCIS' business tremendously. Profits doubled from

RM13.9 million for the year ended June 30, 2002 to RM24.5 million in 2003.

Likewise, total assets grew to RM2.2 billion in 2003 from RM2.0 billion

before.

The merger also has other advantages. `The merger with Zurich would

ensure continuous growth for the company and create a platform for MCIS to

promote its products globally,' says Meyyappan.

He says Zurich Insurance has other strengths that MCIS could leverage

on, one being its international recognition. Zurich Insurance is in the

same league as the big international players such as AIG, New York Life,

Prudential and Nippon Life. The merger would enable MCIS-Zurich to keep up

with, perhaps even stay ahead of, its competitors.

Another advantage of the merger is the ability of both companies to

cross-sell their products. Zurich Insurance has a bigger mix of products

and it specialises in the oil and gas sector. Prior to Zurich Insurance's

entry, MCIS' focus was limited to the conventional `retail and light

policyholders', especially life insurance policies.