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AXA buys stake in UAE peer

By Reuters

French insurance giant AXA Group and its partner in the United Arab Emirates, Kanoo Group, plan to become major shareholders in the UAE's Green Crescent Insurance Co (GCIC), GCIC said on Sunday.

The firm has called a shareholder meeting on March 26 "to consider resolutions to expand the capital base of GCIC and forge a long-term strategic alliance with AXA Group and its UAE partner, the Kanoo Group", it said in a statement.

If the deal is approved, "AXA Group and Kanoo Group would be the primary investors of a capital increase of Dh100 million ($27 million) via a convertible bond instrument" that would push GCIC's capital to Dh200 million on conversion.

The statement did not elaborate on the sizes of the stakes that AXA and Kanoo would own in GCIC, or give details of the nature of the alliance.

AXA said last week it was looking for more acquisitions in emerging markets after it posted a 14 per cent rise in full-year net income and lifted its dividend 13 per cent.

GCIC provides health and life insurance services in the UAE, where the two largest emirates, Abu Dhabi and Dubai, have mandatory health insurance regulations in place.

The firm reported a net loss of Dh4.65 million in 2013 and a Dh17.44 million loss a year earlier. Revenue grew to Dh115.8 million from Dh89.8 million.

GCIC's share price has more than tripled since the end of 2012, outperforming an 87 percent rise in the Abu Dhabi stock market index.

While Abu Dhabi has had mandatory health insurance since 2005, Dubai, with a population of over 2 million, is just starting to implement its scheme and some analysts expect the UAE's smaller northern emirates to follow suit, providing fresh business opportunities for health insurers.