Islamic Arab Insurance Company, better known as Salama, one of the UAE’s largest takaful companies, will acquire the insurance portfolio of Dubai Islamic Insurance and Reinsurance Company, known as Aman, as it seeks to boost its market share and competitiveness.
Salama, which is listed on the Dubai Financial Market, will acquire Aman’s motor, medical, non-motor and group life insurance businesses.
The transaction is expected to be concluded in the first quarter of 2023, once regulatory approval is attained, the companies said on Thursday.
“Acquiring Aman’s portfolio will allow us to add scale and new layers of expertise as we continue to pursue an ambitious strategy for growth,” Salama’s vice chairman Saeed Al Hajeri said.
“We see tremendous opportunity for Sharia-compliant insurance [takaful] solutions and remain committed to delivering substantially more for our customers and shareholders.”
The GCC’s continued economic recovery from the Covid-19 pandemic — spurred by higher oil prices, government spending on infrastructure projects and increasing activity in the non-oil sector — is expected to support Islamic insurers’ growth prospects in 2022 and 2023, a report by S&P Global Ratings said in August.
Gross written takaful premiums are projected to grow by about 10 per cent in 2022 and by 5 per cent to 10 per cent in 2023 as improving economic sentiment, continued infrastructure spending, new mandatory cover and overall higher insurance demand in the Gulf boost the industry, S&P said.
The current trends of raising capital and consolidation among takaful companies are expected to continue in 2022 and 2023 amid “intense competition” and higher capital requirements, the report stated.
In July, Sharia-compliant insurers Dar Al Takaful and National Takaful Company, known as Watania, completed their merger to create the UAE’s largest insurance provider.
“We also expect further consolidation in the UAE, where takaful players compete against larger conventional players, following recent announcements including Watania and Dar Al Takaful,” S&P said.
“Increased scale could help dilute insurers’ fixed costs while reducing top and bottom-line volatility. We also expect further capital raising and consolidation will support capital buffers.”Aman’s Target portfolio, which will be acquired by Salama, had a gross written contribution (GWC) of Dh198.59 million in the first nine months of 2022 and generated Dh5.46 million in net takaful income before administrative overheads, the companies said.—The National