Orient UNB Takaful, a Sharia-compliant insurer, listed its shares on the Dubai Financial Market on Thursday, the latest venture between an insurance company and a bank, as the industries increasingly team up to bolster profitability amid slowing economic growth.
Orient said in a statement to the DFM that it was listing 2 million shares with a face value of Dh100 each.
The plan to form the Islamic joint venture between Union National Bank, an Abu Dhabi-based lender, and Orient Insurance Company was first revealed in November.
Banks and insurance companies in recent years have formed similar partnership as lenders look for high-margin products and services to offer clients.
The listing also comes when many insurance companies are struggling amid intense competition and risky investments made by firms in the industry, but analysts say these are short-term problems and that in the long run there is room for growth.
Many insurers have joined the industry in recent years, making it difficult for some to stay afloat, especially those who made risky investments in the stock market.
There are 91 registered insurance companies in the UAE, according to the Insurance Authority.
While this has been good for consumers, it has led to losses among many insurers. Some have quit the non-life insurance business altogether in the UAE, such as Zurich Insurance, which exited in November 2015.
Still, industry reforms are improving the outlook.
Alpen Capital, a Dubai investment bank, said in a report published in October that the Insurance Authority was reforming the laws in line with international standards to restore profitability and address industry challenges.
The consultancy PwC is also upbeat. It has said that the insurance market in the Middle East has significant growth potential, with an average insurance take-up of just 0.3 per cent in life insurance and 1.1 per cent in non-life insurance.
PwC said that life insurance was particularly underdeveloped in the UAE and Saudi Arabia, and predicted that the insurance sector would experience a wave of mergers and acquisitions.
mkassem@thenational.ae
