• Home
• /
• Business

Salama establishes Shariah syndicate at Lloyd’s

The agreement also establishes SALAMA as the first Middle East Takaful and Re-Takaful company conducting business at Lloyd’s. The primary role of the syndicate will be to promote Re-Takaful and drive expansion of the Islamic re-insurance sector.

The Takaful Syndicate commenced trading on January 1 with an initial underwriting capacity of $72 million. The syndicate enjoys “A” security rating afforded to all Lloyd’s Syndicates by Standard and Poor’s, AM Best and Fitch.

“The London insurance market is the world’s leading centre for international insurance and reassurance and Lloyd’s is the world’s leading specialist insurance market. Nowhere is there such a concentration of specialist underwriting and broking expertise. That’s why SALAMA sees this agreement as an important strategic business move that will have a fundamental impact on the growth of Takaful and Re-Takaful worldwide,” said Shaikh Khaled bin Zayed bin Saqr Al Nahyan, Chairman of SALAMA Islamic Insurance Company. “SALAMA has a proud record of being the market leader in Takaful and Re-Takaful. This agreement is another first that will significantly contribute to the future profitability of the company. It will also create a unique opportunity for Takaful and Re-Takaful companies to benefit from Lloyd’s security

“As an investor in a Lloyds’ entity, SALAMA will be able to provide Takaful companies, in the Middle East and elsewhere, with the capacity they need to provide fast, good value insurance solutions. In this way we believe we can help the entire Islamic insurance industry to grow.”

“Reinsurance is big business at Lloyd’s. It accounted for 30 per cent of $28 billion in gross premium income in 2004,” said Dr Saleh Malaikah, CEO, SALAMA Islamic Arab Insurance Company. “We believe there is strong latent demand for Re-Takaful solutions among existing Lloyd’s clients which we can fulfil, as well as a fast growing demand for Shariah products from the Muslim world.

“Due to the low capacity available in the market, Takaful companies have faced the problem of having to re-insure on a conventional basis, contrary to their preference for cover on Islamic principles. In the Middle East, for example, up to 80 per cent of risk is re-insured on a conventional basis.

“Our association with Lloyd’s will enable us to develop new business that would otherwise have gone to non-Shariah compliant international reinsurance companies,” added Dr Malaikah.

Salama expects the Takaful international market to grow rapidly over the next five years, from $1.7 billion to between $7.5 billion and $10 billion.

Bruce Graham, CEO of Creechurch, the syndicate’s managing agent, said: “We are delighted to have identified SALAMA Islamic Arab Insurance Company as a long-term partner for Creechurch in this unique venture. Their commitment, experience and profile within the Islamic insurance and reinsurance sectors should help us to participate profitably in what we expect to be one of the fastest growing sectors of the insurance industry throughout the next decade.”

As part of its strategy for future growth, SALAMA has invested in developing its insurance products base in UAE and increased the capital of BEST Re - the world’s largest Islamic reinsurance company - from US $55million to $100million. It is expected the capital enhancement of BEST Re will help improve Standard & Poors (S & P) BBB “Good” and A M Best’s B++ “Very Good” ratings. SALAMA also intends to set up a Dh1 billion Re-Takaful company in Saudi Arabia and a Dh100 million Takaful business in Malaysia.

Other plans include an Initial Public Offering of shares in the Islamic Arab Insurance Company, Saudi Arabia, in which SALAMA will have a major stake. The company has already been incorporated and final approval for the IPO is awaited. SALAMA has also initiated a new Family Takaful company in Senegal, SOSAR Life, a sister company for SOSAR Aman, a subsidiary of SALAMA. Other developments include the launch of Family Takaful in Algeria. In addition, SALAMA is finalising the procedures to establish a Family Takaful company in Egypt and has plans to launch a Family Takaful programme in the UAE.

On February 12, in a landmark development, SALAMA became the first UAE insurance company to offer its shares to nationals of other GCC countries. The move followed a UAE government decision to treat GCC nationals as locals in the country’s stock markets. It was also in line with a decision by SALAMA’s shareholders to allow equity ownership to be extended to GCC nationals.

SALAMA was listed on the Dubai Financial Market following an Initial Public Offering which helped raise the company’s capital to Dh1 billion. SALAMA has six Takaful companies and provides services in 70 countries through Tunisia headquartered BEST Re, the world’s biggest Re-Takaful company.