Takaful of the following three modes whichTakaful of the following three modes which

surplus is usually distributed one time per annum at the end of the financial
year which have been audited. Referring to the ultimate sum of surplus, the
surplus to be distributed should refer to the guidelines given by appointed actuary
and endorse by a member of 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 as well as contracts that have been agreed with
the takaful participants.


actuarial principles of the desired characteristics of the surplus distribution
system for the takaful scheme (if surplus belongs exclusively to the

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should be distributed to participants who contribute to profits and the
distributions should be equitable. The actuarial present value of the surplus
generated by the policy should be same as the actuarial present value of bonus
paid to the same policy. For an equitable surplus distribution, takaful
operators may adopt one of the following three modes which are pro-rata,
selective or off-setting.


b.   Acceptable

Participants need to accept the logic and fairness of the surplus
distribution method prepared by the actuary and adopted by the takaful company.



the method of surplus distribution system must easy to administer and
easy for participants to understand and accept the logic.



The system of surplus distribution must easy to change or modify if
circumstances cause changes in the amount of surplus available.



of surplus must in line with the actuarial basis for the provision of     contributions and liabilities.

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.