Dar Al Takaful and Watania merger expected in June

The merger of the Islamic insurance companies will be effective on June 14

Dubai-listed Dar Al Takaful acquired Noor Takaful for Dh215 million in cash in 2020. Pawan Singh / The National

Islamic insurance companies Dar Al Takaful (DAT) and National Takaful Company (Watania) said their merger is expected to take place in June.

The effective date of merger, which has received a unanimous support and recommendation of the DAT and Watania boards, will be June 14, the entities said in a regulatory filing to the Dubai Financial Market on Thursday.

“If you are in any doubt as to the action you should take, it is recommended that you seek your own independent financial advice from a financial advisor licensed by SCA [Securities and Commodities Authority] and independent legal advice from your lawyer or other appropriate independent legal advisor,” they said in the shareholder circular.

Following the merger, Watania will be dissolved pursuant to the provision of Article 293 of the Companies Law.

“Upon the merger becoming effective, the assets and liabilities of Watania will be assumed by DAT on the effective date in consideration for the issue of new DAT shares to Watania shareholders," the statement said.

The combined group is “well positioned to provide support for the UAE's economic vision and to play a key role in the country's growth, diversification and development of the local takaful market”.

It is expected to boost the “financial and operational resilience of the combined group, which is expected to benefit from an increase in scale, improvement in portfolio mix and balance sheet”.

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, DAT and Watania aim to consolidate the highly fragmented takaful industry.

Besides creating value for their shareholders and maximising their returns, the new company aims to produce “sustainable and secure long-term returns” from the development and management of, and investment in, its takaful insurance activities.

It will focus on growing its position in its core markets and diversifying the revenue streams, the entities said.

The combined portfolio will have a mix of medical, motor and family takaful, and a more balanced business mix between Dubai and Abu Dhabi.

“A larger portfolio will allow the combined group to enhance its technical analysis capability and expand product portfolio and mitigate risks,” the companies said.

Abu Dhabi-listed Watania acquired a 4.9 per cent stake in DAT in May 2020 for Dh5.88 million ($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, Dubai-listed DAT bought competitor Noor Takaful for Dh215m in cash, acquiring its Noor Takaful General and Noor Takaful Family units.