Dar Al Takaful and Watania inch closer to creating one of the largest insurance providers

Transaction is in final stages of obtaining regulatory approvals from Central Bank of the UAE and Securities and Commodities Authority

Dar Al Takaful will remain listed the Dubai Financial Market after the merger. Reuters

Sharia-compliant insurance companies Dar Al Takaful and National Takaful Company (Watania) completed another “condition precedent”, moving closer to their proposed merger that will create one of the Emirates’ largest Islamic insurance providers.

The transaction is in the final stages of obtaining regulatory approvals from the Central Bank of the UAE and the Securities and Commodities Authority and is on track for completion by the end of this month, the entities said in a joint statement on Friday.

Their 45-day policyholders’ notice period to provide feedback or object to the proposed merger has ended without any objections, the companies said.

In the share-swap deal, Watania shareholders will receive shares in Dar Al Takaful, which will be the entity that will continue to remain listed on the Dubai Financial Market.

Under the terms of the merger, Watania shareholders will receive 0.734375 Dar Al Takaful shares for every Watania share they own, valuing the merged company at Dh260 million ($70.8m).

“We have the vision and know-how to immediately start executing our ambitious plans to build a national and regional Takaful leader that is strongly committed to product innovation, service excellence, productivity and shareholder value creation,” said Gautam Datta, chief executive of Dar Al Takaful.

The UAE insurance market is expected to grow at a compound annual rate of 4.1 per cent between 2021 and 2026, Alpen Capital said in a February report.

“Through the market consolidation, Dar Al Takaful and Watania aim to consolidate the highly fragmented takaful industry,” Mr Datta said.

“The insurance industry is on a growth trajectory as the region emerges into a new era following the worst impacts of the [Covid-19] pandemic.

“We are building a strong, scalable and adaptable business model that is based on best practices and underpinned by clear values that will be able to meet the changing demands of customers and the overall market.”

As part of the merger’s legal process, trading in Watania shares on the Abu Dhabi Securities Exchange ceased as of the closing of the trading session on June 15 until the official delisting of the company from the bourse.

Watania acquired a 4.9 per cent stake in Dar Al Takaful in May 2020 for Dh5.88m. 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 Dh215m in cash, acquiring its Noor Takaful General and Noor Takaful Family units.