Islamic insurers Dar Al Takaful and National Takaful Company (Watania) have reached an agreement for a potential merger as they look to consolidate market share in the UAE.
The proposed transaction is expected to be completed in the third quarter of this year, subject to the approval of shareholders and regulators, the companies said in a joint statement to both the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX).
The deal has received conditional approval from the Central Bank of the UAE. Both companies are “actively working with the Securities and Commodities Authority and other relevant regulators to obtain the remaining regulatory approvals”, the statement said.
The two companies explain the rationale for the proposed merger, as follows:
- To consolidate market share in the highly fragmented UAE takaful market and build scale for the merged company;
- To diversify the geographical scope and products; and
- To generate meaningful cost synergies driven by economies of scale and elimination of overlapping functions to enhance profitability.
Increased scale, diversification and meaningful synergies embedded in the merger would potentially benefit policyholders and shareholders in the long term.
ADX-listed Watania acquired a 4.9% stake in DFM-listed Dar Al Takaful in May 2020 for AED5.88m ($1.6m). The move was aimed at generating investment income by way of capital appreciation and dividends in the future, the company said at the time.
The same year, Dar Al Takaful bought competitor Noor Takaful for AED215m in cash, acquiring the latter’s Noor Takaful General and Noor Takaful Family units. M