Arab Insurance Group plans buyout of loss-making Takaful Re despite sector’s fierce competition



Arab Insurance Group (Arig) plans to acquire full control of Takaful Re, despite deepening losses at the Islamic reinsurer amid fierce competition in the sector.

The Bahraini firm, whose shares are listed on the Dubai Financial Market, said yesterday that it was in negotiations with the holders of the 46 per cent of Takaful Re shares that it does not own.

Takaful Re’s other major shareholders include Dubai Investments, Emirates Funds, Emirates Industrial Bank, Islamic Development Bank and Dubai Islamic Bank.

Arig said the equity acquisitions were subject to approvals from individual shareholders and the Dubai Financial Services Authority.

It did not respond to questions about what stage its negotiations with shareholders have reached, or what price would be offered for the shares.​

Arig’s intention to buy out other Takaful Re shareholders comes amid fierce competition among many Islamic insurance firms for market share, pressuring profit margins.

Takaful Re’s losses deepened to US$9.1 million last year from a loss of $8.1m in 2013, which Arig attributed to “adverse claim developments during the year”. Gross underwriting contributions fell 14 per cent to $18.4m last year.

Return on equity at UAE takaful companies was 0.4 per cent last year, compared with 6 per cent in Saudi Arabia and 14 per cent in Malaysia, according to data from the accountancy firm Milliman.

Last year the Islamic insurance industry ran a net underwriting loss, according to the credit ratings agency Standard & Poor’s.

The value of claims that policyholders made exceeded the fees that policyholders paid by 4 per cent, on average, across the UAE’s listed takaful firms.

“More than 70 Sharia-compliant insurers in the GCC region are competing for premium income of nearly $10 billion, about 80 per cent of which is based in Saudi Arabia,” S&P said in a note this week.

“Unless they successfully differentiate their products and attract new insurance buyers to their Sharia-compliant product, we anticipate that it will be difficult for them to achieve sustainable business positions.”

Arig shares, which are among the least liquid on the DFM, ended trade yesterday unchanged at Dh1.90.

jeverington@thenational.ae

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Q2 Imagine that the interest rate on your savings account was 1 per cent per year and inflation was 2 per cent per year. After one year, how much would you be able to buy with the money in this account?
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Dubai is on a mission to record good air quality for 90 per cent of the year – up from 86 per cent annually today – by 2021.

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Thursday, November 7 – UAE v Oman
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Online grocer Ocado revealed retail sales fell 5.7 per cen in its first quarter as customers switched back to pre-pandemic shopping patterns.

It was a tough comparison from a year earlier, when the UK was in lockdown, but on a two-year basis its retail division, a joint venture with Marks&Spencer, rose 31.7 per cent over the quarter.

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COMPANY PROFILE
Name: Almnssa
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MATCH INFO

Europa League final

Who: Marseille v Atletico Madrid
Where: Parc OL, Lyon, France
When: Wednesday, 10.45pm kick off (UAE)
TV: BeIN Sports

If you go
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