UAE-based insurance firms Islamic Arab Insurance (Salama) and Takaful Emarat Insurance have decided to abandon their merger plans.
“Reference to the intended merger between Islamic Arab Insurance Company (Salama) and Takaful Emarat, one of the Salama’s plans for growth and expansion that was announced earlier, the company would like to announce that merger through share issuance (merger) is not being considered,” the Salama said in a stock filing,
However, the two insurers are in working on “alternative arrangements” such as the acquisition of the Takaful business of Takaful Emarat and not its assets.
The non-cash deal, which secured initial regulatory approval in October 2022, would have bolstered Salama’s position as a leading Islamic insurer.
Salama said it has informed the country’s central bank about its plans.
“A Salama and Takaful Emarat alliance was seen as a done deal,” reported the Gulf News, citing a market analyst.
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“All through the final months of 2022, they had made significant progress towards reaching a closure on the deal. The latest announcement was unexpected.”
As per the report, the UAE insurance industry is expected to witness dealmaking activity in the coming weeks even without this agreement.
“The UAE insurance sector will likely see more consolidation – it is a process of creating the strongest and the fittest,” an insurance industry source was quoted by the publication as saying. “The authorities are extremely favourable towards that process.”
In December 2022, Salama announced plans to buy the insurance portfolio of Dubai Islamic Insurance and Reinsurance Company (Aman).
The assets under consideration include Aman’s motor, medical, non-motor and group life insurance business.