Dubai, Abu Dhabi companies to merge to create new Takaful provider

Shareholders of two UAE-based Islamic insurance (Takaful) companies approved a merger to create the a new Takaful provider.

Dubai-based Dar Al Takaful (DAT) and Abu Dhabi-based Watania will be merged to create what is claimed to be the UAE’s largest Takaful provider by market share. The merger is expected to unlock value as a result of cost and revenue synergies, optimized sales channels, reduced operating expenses and enhanced IT platforms.

The new entity would be positioned to expand its product offerings, and geographical footprint, while offering competitive terms and improved customer service. The new entity would also benefit from cross-selling opportunities through the increased geographic reach, as well as through capitalising on larger underwriting capacity.

Based on the proposed structure, the merger will involve a share swap, whereby shareholders of Watania, now listed on the Abu Dhabi Securities Exchange, will receive shares in DAT, which would be the remaining entity that will continue to be listed on Dubai Financial Market. Under the terms of the merger, Watania shareholders would receive 0.734375 DAT shares for every Watania share that they own, valuing the merged company at Dhs260.15tn. The merger is expected to complete by end of June 2022.

All DAT and Watania policies would be held by two DAT subsidiaries: Noor Takaful Family and Noor Takaful General, with DAT being the holding company that owns the two entities. Following shareholders’ approval, the creditor will have a 30-day objection period and policyholders will have a 45-day notice period.

Matar Hamdan Sultan Hamad Al Ameri, chairman of DAT, said: “The proposed merger would bring new energy and dynamism into the UAE fragmented Takaful market. DAT and Watania would build great synergies together, acting as an Islamic insurance powerhouse for the benefit of policyholders, shareholders, and other stakeholders. The transaction would enable DAT to expand not only within the UAE, but potentially across the region, fulfilling a core objective of takaful by broadening its base of policyholders and supporting profitability in the pool.”

Dr. Ali Saeed Bin Harmal Aldhaheri, chairman of Watania, said: “This compelling strategic transaction would allow DAT to leverage its scale as a takaful champion to further develop new and innovative insurance offerings, meeting the ever-changing needs of the market and the public’s requirements for flexible and imaginative Takaful solutions. Our enhanced financial base and the substantial revenue and cost synergies expected to arise from the merger, would enable us to offer reliable and more comprehensive coverage with terms that are highly favorable for policyholders and to create substantial long-term value to our shareholders.”

Aldhaheri will be the proposed chairman of DAT post the completion of the merger, while Al Ameri would be its vice chairman. Following the shareholders’ approval, the merger will be subject to final approvals from the Central Bank, the UAE insurance regulator, and SCA, the regulator of listed companies.

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