Takaful takaful participants and takaful company as well. The

Takaful company surplus usually distribute one time
per annum at the end of the financial year. Referring to the ultimate sum of
surplus, the surplus to be distributed should refer to the guidelines given by
appointed actuary and endorse by the board of directors. The guideline prepared
by appointed actuary are based on several factors such as expectations of
takaful participants, regulations has been established by financial regulators,
internal policy of takaful institutions and contracts that have been agreed
with the takaful participants and takaful company as well.


The actuarial principles of the desired
characteristics of the takaful surplus distribution method are stated as follow
with assumption the surplus belongs exclusively to the participants:

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   The element of equitable should be applicable in surplus distribution which means
only the participants who really contribute to profit entitled to get the surplus
distribution. For an equitable surplus distribution, takaful operators may
adopt one of the following three modes which are pro-rata, selective or



The surplus distribution method must be acceptable by participants. Participants
have no doubt towards the logic and fairness of the surplus distribution method
prepared by the actuary and adopted by the takaful company.


 The method of surplus distribution must
be simple and easy to govern by takaful company. At the same time, easy for
participants to understand and accept the logic. It is important to avoid
confusion that the participants may encounter if the method used is too comprehensive.


 The method of surplus distribution must
be flexible, easy to change or modify by takaful companies if circumstances
cause changes in the amount of surplus available.


  Distribution of surplus must be consistent
and in line with the actuarial basis for the provision of contributions and


The determination of surplus
is essentially an actuarial process because it relies strongly on and sensitive
to the actuarial estimation of liability provisions for the business.