With projections of massive growth, ACR’s new venture is well timed
Asia Capital Re has announced plans to launch the world’s largest retakaful company. It follows similar ventures by Munich Re, Hannover Re, SCOR and Arig among others.
Retakaful business is Shari’ah-compliant reinsurance for Shari’ah-compliant insurance companies. Until recently it was a niche business, but with projections of huge growth for the sector it is fast becoming mainstream.
Asia Capital Re has announced an agreement with Malaysian national investment company Khazanah Nasional Bhd and Dubai Banking Group to set up a retakaful company.
According to the company, the new venture will be the largest retakaful company in the world with a capitalisation of $300m.
Named ACR ReTakaful Holdings Limited, it will be based in the Dubai International Financial Centre.
“There is nothing in Islam that actually inhibits insurance
Takaful reinsurance is quickly becoming big business. A recent report by Ernst & Young suggests that growth in the takaful sector has outpaced that of conventional insurance sectors in most countries of the Middle East.
E&Y says the takaful industry could be worth $10bn to $15bn in the next ten years if current growth rates continue. It also forecasts that accepted contributions globally could be more than $4.3bn in 2010, with 20% annual growth for the foreseeable future.
It identified high economic growth in the Middle East and other Muslim nations, such as Malaysia and Indonesia, and increase in per capital GDP, a youthful demography, increasing awareness and desire for Shari’ah compliant offerings and increasing asset based, Shari’ah compliant financing.
Of the 133 Takaful operators worldwide, 59 are within the Gulf Cooperation Council (GCC) countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
At the World Insurance Forum in Dubai in March, Ajmal Bhatty, CEO Takaful & chief operating officer of Tokio Marine Middle East, said the perception of insurance in the GCC would change as its economies developed.
“All the evidence suggests that the insurance sector is set for a golden era over the next decade
Yousef Hussain Kamal
“The mindset is that insurance is unacceptable in the region, but there is nothing in Islam that actually inhibits insurance,” he explained.
Speaking at MultaQa Qatar, a conference in Doha to showcase the insurance potential of the region, Qatar’s minister of finance, Yousef Hussain Kamal, said the region was brimming with potential.
“There can be no doubt that this is just the beginning,” he said. “All the evidence suggests that the insurance sector is set for a golden era over the next decade.”
By 2010, it is estimated that the population in the Middle East and North Africa region will reach 330,000,000. Insurance growth rates in 2005 in the GCC ranged from a relatively low 5% in Bahrain, to 17% in Qatar, and well over 30% per year in the UAE, according to S&P.
Asia Capital Re has joined the new breed of retakaful companies at the right time if those figures are accurate.