Dubai: The UAE’s insurance sector is seeing another consolidation, with Takaful Emarat Insurance getting approval for a merger with Salama (Islamic Arab Insurance Co.). The deal is expected to be a non-cash one, through the issuing of additional shares by Salama to Takaful Emarat shareholders.
“Takaful Emarat is taking all necessary actions by required by regulators, including presenting the mentioned development projects to shareholders for their approval, in co-ordination with UAE Central Bank and Securities and Commodities Authority,” said a statement.
Salama shares showed an immediate gain to 56 fils in early trading today (October 3) from 52-week low of 0.49. (Its 52-week high remains 87 fils.)
There has been talk of consolidation in the UAE insurance sector for some time - but recent months have finally confirmed that this is progressing at quite a speed. This has involved both insurers as well as TPAs.
In August, a deal was effected that brought together DFM-listed Dar Al Takaful and Watania, also done through issuing of new shares. Dar Al Takaful added to its capital through new shares issued to Watania. In April, the insurance arm of Oman’s OMINVEST acquired RSA Middle East. And last year, Gulf Insurance Group completed the buyout of French insurance giant AXA's regional interests.
The local insurance sector is grappling with multiple issues, not least being the steady rise in claims on key lines such as healthcare and the high-volume motor cover. A further tightening up for the industry is expected heading into the next year, unless that's compensated with higher premiums, say market sources.