Takaful takaful participants and takaful company as well. The

Takaful company surplus usually distribute one timeper annum at the end of the financial year. Referring to the ultimate sum ofsurplus, the surplus to be distributed should refer to the guidelines given byappointed actuary and endorse by the board of directors. The guideline preparedby appointed actuary are based on several factors such as expectations oftakaful participants, regulations has been established by financial regulators,internal policy of takaful institutions and contracts that have been agreedwith the takaful participants and takaful company as well.  The actuarial principles of the desiredcharacteristics of the takaful surplus distribution method are stated as followwith assumption the surplus belongs exclusively to the participants: a.   The element of equitable should be applicable in surplus distribution which meansonly the participants who really contribute to profit entitled to get the surplusdistribution. For an equitable surplus distribution, takaful operators mayadopt one of the following three modes which are pro-rata, selective oroff-setting.  b.

The surplus distribution method must be acceptable by participants. Participantshave no doubt towards the logic and fairness of the surplus distribution methodprepared by the actuary and adopted by the takaful company. c. The method of surplus distribution mustbe simple and easy to govern by takaful company. At the same time, easy forparticipants to understand and accept the logic.

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It is important to avoidconfusion that the participants may encounter if the method used is too comprehensive. d. The method of surplus distribution mustbe flexible, easy to change or modify by takaful companies if circumstancescause changes in the amount of surplus available. e.

  Distribution of surplus must be consistentand in line with the actuarial basis for the provision of contributions andliabilities. The determination of surplusis essentially an actuarial process because it relies strongly on and sensitiveto the actuarial estimation of liability provisions for the business.