Munich Re seeks to enter UAE market

Munich Re Retakaful, a unit of Germany-based Munich Re Group, is holding talks with Dubai International Financial Centre (DIFC) to enter UAE to tap opportunities in the fastest growing Islamic insurance (takaful) sector, a senior company official said.

"Munich Re Retakaful was set up in 2007 to focus initially on Malaysia and Indonesia," Chief Executive Officer Tobias Frenz told Emirates Business.

"We are already the market leader in Malaysia and now we plan to conquer the GCC market, with focus on UAE and Saudi Arabia. We actually had discussion with them [DIFC] and are looking at options for Munich Re Retakaful to have a physical presence here. Right now we service our clients from the Kuala Lumpur office."

The company, he said, plans to grow organically in the region through friendly partnerships and not through aggressive mergers and acquisitions.

"At Munich Re Retakaful, we prefer to grow organically. We have never been big into acquisitions and don't plan any acquisitions in the region. On the retakaful side, companies here are too small for Munich's liking.

"We may have friendly partnerships here."

The UAE insurance market is already over crowded with 58 insurance players fighting to get a share of the pie from a population of just six million. With the entry of Munich Re and other global players, the local insurance industry in the UAE is poised for stiff competition and consolidation.

Munich Re Retakaful may start its GCC operation as re-insurer than getting into direct insurance business. Frenz said: "We are very good in re-insurance. We have high hopes for family retakaful in Saudi Arabia especially in family and mortgage related cover. A couple of new takaful players are entering Saudi market and Munich Re is supporting them. The UAE and Saudi Arabia will be a key market in this part of the world."

The global takaful market is likely to exceed $8.9 billion (Dh32.6bn) in premium collection this year from $5.3bn in 2008, according to Ernst and Young's latest report.

Saudi Arabia and Malaysia were the world's biggest takaful markets in 2008 with contributions of $2.9bn and $900 million respectively.

The fastest-growing takaful markets were the UAE with a compounded annual growth rate of 135 per cent from 2005 to 2008.

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