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This study examines the impact of external corporate factors (external auditors, insured satisfaction and corporate social responsibility) on the performance (ROA, ROE, ROI) of takaful providers of distinguishable Muamalah contracts (wakalah and Hybrid).

The full sample includes 30 Takaful insurance companies listed in Southeast Asia (SEA) and Gulf Cooperation Council (GCC) countries over the period 2011–2021. We use the FGLS method for data analysis.

Our results reveal that Takaful insurance, which holds one of the Big Four with qualified Shariah members as external auditors, leads to improved performance (ROA, ROE and ROI). In addition, our findings show that Takaful insurance should be concerned with insured satisfaction to determine its success and generate higher performance for both the wakalah and hybrid contracts (ROA, ROE and ROI). Furthermore, Corporate Social Responsibility is considered a source of efficiency that enhances Takaful’s performance for the two types of wakalah and hybrid models (ROA, ROE and ROI).

Some suggestions may be useful for Takaful insurance regulatory authorities to intensify CSR activities, hold one of the Big Four as an external auditor and realize insured satisfaction.

This study highlights that it is beneficial for policymakers, insurers and investors to explore external factors that influence financial performance (return on assets, ROA; return on equity, ROE; return on investment,) in the Takaful insurance market, which uses wakalah and hybrid contracts.

The purpose of this study is to examine the impact of board characteristics (board size, board independence and duality) on the performance of takaful insurance providers with distinguishable muamalah contracts (wakalah and hybrid) moderated by ownership concentration.

The sample consists of 30 takaful insurances. The authors divided it into two subsamples: 18 insurance companies using wakalah contracts provided by Southeast Asia and 12 insurance companies using hybrid contracts provided by the Gulf Cooperation Council over the period 2010–2020. For data analysis, the authors used the partial least squares path modeling method.

The results show that the larger the board of directors and the higher the number of independent directors, the greater the takaful performance in both the wakalah and hybrid subsamples. Nondual functions improve the takaful performance in both the wakalah and hybrid subsamples. The results also reveal that a highly concentrated ownership structure positively (negatively) moderates the relationship between board size and takaful performance in the wakalah (hybrid) subsamples. Moreover, highly concentrated ownership insignificantly (negatively) moderates the relationship between independent directors and takaful’s performance in the hybrid (wakalah) subsample. Furthermore, a highly concentrated ownership structure insignificantly (negatively) moderates the relationship between the nondual structure and takaful performance in the wakalah (hybrid) subsample.

This study contributes to the understanding of the moderating role of a highly concentrated ownership structure between the characteristics of the board of directors and the performance of takaful insurance, which applies wakalah and hybrid contracts. In addition, this study contributes to takaful insurance by determining the appropriate board characteristics that must be adopted to achieve oversight and improve performance. Regulators should appreciate this contribution to the formulation of suitable approaches for efficiently supervising takaful insurance activities.

This paper aims to examine the effect of governance mechanisms (board size, board independence, duality, the Sharia board size, Sharia board meetings and ownership concentration) on the performance of insurance providers of distinguishable Muamalah contracts (wakalah and hybrid), moderated by the length of senior leaders’ servicing time.

The full sample includes 21 listed Takaful companies divided into two subsamples – 12 insurance wakalah contracts offered in the South East Asian (SEA) countries and 9 insurance hybrid contracts offered in the Gulf Cooperation Council (GCC) countries over the period of 2012–2018. The methodology is informed by Baron and Kenny’s (1986) moderation process approach.

The results of this study indicate that the larger the size of directors’ board and the higher the number of outside directors, the greater the SEA wakalah Takaful insurance performance. Nondual functions and a larger size of Sharia board along with a highly-concentrated ownership structure have a positive effect on the Takaful insurance performance in both the SEA and GCC regions. Furthermore, the higher the Sharia board meetings, the higher performance of all types of Takaful insurance providers in the sample. As for the moderating effect of the director’s seniority, it is found to negatively moderate the relationship between the governance mechanisms and the Takaful performance in both regions.

This paper highlights that the leader’s entrenchment stands as an obstructing factor impeding the governance mechanisms from enhancing Takaful performance. Thus, it serves to contribute to clearly understanding the appropriate governance mechanisms usefully fit for a Takaful insurance effective performance, applying the wakalah and hybrid contract types. Such a contribution should be appreciated by the concerned regulators engaged in setting up limited serving periods for the directors whereby the Takaful insurance practice could be efficiently managed and supervised.