Dar Al Takaful to buy Noor Takaful for Dh215m

Islamic insurance company Dar Al Takaful is buying competitor Noor Takaful for Dh215 million in cash, as it looks to build its market share in the industry.

Dar Al Takaful said on Sunday it had received “binding financial commitments” from UAE banks to finance the deal, which will see it buy the Noor Takaful General and Noor Takaful Family units.

“The transaction is consistent with the company’s strategy to build scale and market share in fragmented market conditions. Given the complementary nature of the business of DAT and the Noor Takaful companies, DAT expects to generate synergies from the transaction,” it said in a statement to the Dubai Financial Market, where its shares trade.

Dar Al Takaful is an Islamic insurer which last month reported a 19 per cent increase in first quarter net profit of Dh2.5m to shareholders despite takaful income declining by 3 per cent to Dh183.5m. Noor Takaful is the insurance arm of Noor Investment Group, the Islamic finance business owned by the Investment Corporation of Dubai that also concluded the sale of Noor Bank in January to Dubai Islamic Bank, creating a lender with Dh275bn in assets.

Dar Al Takaful said the transaction has already been approved by its shareholders, the Securities and Commodities Authority and the UAE Insurance Authority. The deal is expected to conclude during the current quarter ending on June 30, although the financial impact will be presented in Dar Al Takaful’s third quarter results.

The UAE’s insurance market remains fragmented, with 62 traditional and Islamic operators – 30 of which are listed on local markets, according to a report produced in February by consultancy Milliman.

Gross written premiums by the 30 listed operators grew by 8.3 per cent to Dh23.7bn last year, while combined net profits grew 22 per cent to Dh1.6bn. Growth among Islamic insurers was slower, however, with top-line growth reaching 3.8 per cent for takaful operators, compared to 8.8 per cent for traditional firms. Takaful operators wrote Dh3.9bn worth of premiums, compared to Dh19.8bn by traditional firms, the report said.

Ratings agency Moody’s said in March that it expects the takaful market to continue growing globally this year as Islamic insurance products are offered in more countries.

“We expect … the takaful insurance market will see steady growth as insurance premiums pick up in newly penetrated markets,” said Nitish Bhojnagarwala, vice president and senior credit officer at Moody’s. “However, downside risks are rising because of the coronavirus outbreak, as prolonged market disruption could dissuade issuers from coming to market.”

SOURCE: https://www.thenational.ae/business/markets/dar-al-takaful-to-buy-noor-takaful-units-for-dh215m-1.1030141