By: Amr Adel

Dubai – Mubasher: Dar Al Takaful welcomes the idea of merging takaful insurance firms in the UAE, managing director Saleh Al-Hashimi told Mubasher in an exclusive interview on Monday.

He added that most companies suffer from low capital in addition to strong competition and burning of prices. Mergers allow companies to increase their competitiveness and boost their position in the market.

The takaful insurance market represents a small percentage between 8% and 9% of the overall insurance market in the UAE, Al-Hashimi noted.

The UAE’s Insurance Authority (IA) recently received several requests from takaful insurance firms regarding possible mergers and acquisitions in the sector, according to previous statements by IA general manager Ibrahim Al-Zaabi.

The number of takaful insurance firms grew to 11 by the end of 2014, with a combined capital of AED 2.3 billion, IA statistics revealed, adding that total investments reached AED 3 billion during the period.

Takaful insurance contributes only 1% of total insurance premiums in the sector in the UAE, which amounted to AED 33 billion by the end of 2014.

The managing director declined to comment on whether his company has received merger offers from other companies.

Expansion, new product

Dar Al Takaful has no new geographic expansions planned for this year, Al-Hashimi said, adding that the company will continue to serve the UAE market through its three branches in Dubai, Abu Dhabi and Sharjah.

The firm is currently cooperating with several authorities and parties that seek to understand the takaful insurance system in Africa, Europe and India, where the company offers technical consultations in the sector, he added, noting that takaful insurance still has many opportunities ahead and is witnessing better growth than its counterpart of traditional insurance.

The managing director revealed that his company is looking into launching a new takaful insurance product that will be made available in the UAE market this year.

Dar Al Takaful is looking to increase its operations in the health insurance sector, after health insurance became mandatory in Dubai and Abu Dhabi and is likely to become so in the remaining emirates, the managing director stated.

Capital increase

Al-Hashimi said his company is awaiting an improvement in market conditions to implement the capital increase subscription worth AED 50 million, especially since the firm has already received the approval of the Securities and Commodities Authority (SCA) for the prospectus.

On 7 May 2014, shareholders approved a 50% capital increase from AED 100 million to AED 150 million through a rights issue of the company’s shareholders, at two shares for every share.

During the interview, Al-Hashimi said the company will try to be more cautious in 2015, which is expected to be a tough year owing to the fluctuations seen in 2014, particularly in the stock markets, which in turn will be reflected on the company’s growth.

He added that Dar Al Takaful is examining investing in neighbouring markets, particularly the Saudi one, which is a promising market, especially after it opens to foreign investments in mid-June.

The takaful insurance firm posted net profits of AED 226,000 in Q1-15 compared to AED 2.06 million ($560,000) in the same period in 2014, a drop of 89%. The firm previously reported a leap in its an annual profits by 443% to AED 4.56 million in 2014, up from AED 840,700 in 2013.

Translated by: Nada Adel Sobhi