Islamic Arab Insurance Company (Salama) has allocated $200 million (Dh734m) for overseas acquisition of Shariah-compliant insurance, or takaful, companies this year, a senior executive said.
“We have allocated $150 to $200 million at this point for acquisitions. We are looking at companies in Malaysia, Indonesia, the Indian Subcontinent and Turkey,” Parvaiz Siddiq, General Manager of Salama (pictured above), told Emirates Business in an interview.
“We are looking at a number of possibilities because if you have a number of options, you can choose the one you want. Whatever will make the most sense, money will be spend on that.”
In Malaysia, the company is in talks for acquisition of Syarikat Takaful Malaysia. Although it has a presence in the re-takaful business through Tunisia-based Best Re, the acquisition, if it happens, will allow Salama to enter the lucrative takaful business in Malaysia.
“We are already looking at acquisition targets in Pakistan, but as for India we are not certain how we will enter that market.”
Takaful is an Arabic word meaning “guaranteeing each other”, or joint guarantee.
The company is now focusing on family takaful business. “Family takaful is likely to be a major factor in growth of takaful and companies are yet to play significant role in the corporate segment of the market,” said Siddiq. “All our entities, including the UAE business, are working towards that. In fact, we launched products in this segment in July 2007 and now we have signed a couple of agreements to distribute them.”
Salama, which is listed on the Dubai Financial Market, expects family takaful to contribute 25 per cent to its premium income for the UAE business, and five per cent to its overall group business. “The significant thing is we have developed our product ourselves rather than taking a product and white-labelling it or copying someone else’s product.”
Earlier this month, AM Best, an international insurance rating agency, upgraded Salama’s financial strength ratings to “A-” (excellent) from “B++” (good) and upgraded the issuer credit ratings to “a-“ from “bbb+”. The firm has invested Dh165m in developing its insurance products base in the UAE and increased the capital of one of its subsidiaries, Best Re, from $55m to $100m.
According to Siddiq, there are about 85 dedicated takaful companies and about 38 takaful windows, mostly based in Indonesia.
Salama is the largest shareholder in Saudi IAIC for Cooperative Insurance, owns 52 per cent in Sosar of Senegal, has 99 per cent shareholding in the Bahrain-based Takaful and Re-Takaful International Investment Company, owns 51 per cent shareholding in Cairo-based Egyptian Saudi Insurance Home in addition to 90 per cent shareholding in Salama Algeria.
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