“SALAMA” Islamic Arab Insurance Co. the largest Takaful and Re-Takaful operator in the world, has achieved new record profits by the end of the third quarter of 2006.  The achieved profits are three fold those made by the end of the same quarter of 2005.  

The company had made AED 110 million for the year 2005, which makes the 3rd Quarter 2006 profits represent a 30% increase over the entire annual profits of last year.      

It is worth noting that Saudi IAIC, a subsidiary of SALAMA, has obtained a license to commence operations in Saudi Arabia. A Royal Decree has been issued to incorporate the company about a month ago and it is expected 40% of the company’s capital will be offered for subscription in Saudi Arabia within two months.     

Sheikh Khalid Bin Sagr Al-Nahayan, Chairman of SALAMA commented: “Our company has presented a distinguished performance since its shares were traded on the Dubai stock exchange one year ago. The remarkable success was not limited only to the launch of the first IPO, but we have also a majority shareholding in the Takaful & Retakaful International Investment Co. (TARIIC) of Bahrain , and BEST Re, the largest re-takaful company in the world. These steps have contributed to expanding our geographic presence to include North Africa, especially Egypt , Algeria , Senegal and Tunisia ”.      

Sheikh Khalid added: “We have also recorded a huge success in developing the company’s commercial identity in addition to achieving excellent financial results. These results reflect our company’s achievements in consolidating its operations in the local and regional markets through offering a full range of takaful solutions and products that are compatible with Islamic Shari’a to various communities around the globe”.      

The company’s improving performance continued throughout the year 2006, culminating in net profits of AED 143 million (about US$ 39) for the first half of the current year, representing a rate of growth of 300% over the same period of the previous year.      

From his perspective, Dr. Saleh Malaikah, the Vice Chairman and CEO of SALAMA said: “We have been blessed by Allah to obtain the Royal Decree incorporating Saudi IAIC as a public joint-stock company that will offer 40% of its shares will be offered to the general public in Saudi Arabia.  Despite the company’s initial capital of the SR 100 million, the plans and expectations of Saudi IAIC include raising its capital several fold within a relatively short period to keep abreast of the growth in company operations”. Upon being asked about his expectations of the volume of Saudi IAIC operations, he added “Although Saudi IAIC is going to be a new joint-stock company, it is in fact a continuation of IAIC of Bahrain, which has been operating in Saudi Arabia since 1979 as the first Islamic insurance company not only in the region but also in the world. Saudi IAIC will acquire free of charge the insurance portfolio of Bahrain IAIC which will go into run off and cease writing new insurance business once Saudi IAIC commences operations following the IPO in about two months. All existing insurance operations will be renewed by the new company. We are planning to reach second place within 5 years in terms of operations volume in the Saudi market which is expected to generate insurance premiums of SR 15 billion”.

Malaikah added” “Saudi IAIC will contribute toward increasing SALAMA’s profits gradually and significantly. We expect strong growth during next year and following years. Based on the company’s ambitious expansion plans, we are preparing to open eight new branches during the next few months in addition to the existing six branches. We have also added medical insurance to our operations after having obtained a license from the Saudi Medical Insurance Board.

It is worth noting that the Saudi insurance market in Saudi Arabia is witnessing a quantum shift following the issuance of a Royal Decree three years ago to regulate the insurance industry on cooperative insurance basis under the control of the Saudi Arabian Monetary Agency (SAMA). Over 70 companies operated in the market, most of them were registered in Bahrain as offshore companies. SAMA has issued the executive regulations for the insurance activities in the Kingdom and licensed 13 companies that subsequently were included in the Royal Decree for incorporation as public joint-stock companies, among which was Saudi IAIC. Other companies were given a grace period of three years to change their status to qualify for a license to continue operations. The grace period ends in April 2008. Most of those companies, however, have not come forward with requests for a license and a some of them have ceased operations in the Kingdom, which means a greater opportunity for the 13 licensed companies to penetrate the market. The deputy governor of SAMA, Dr. Mohammed Al-Jasir, had announced in the first Saudi Insurance Summit that was held in Jeddah early in 2006 that the total number of licensed companies will not exceed 22 for an indefinite period.

SALAMA expects substantial growth during the next five years in the global takaful and re-takaful industry which currently is valued at US$ 1.7 billion to reach US$ 7.5 to 10 billion, making it one of the fastest growing sectors of the financial services industry.

Dr. Malaikah explained: “We shall focus our efforts during the current year on the diversification of list of services through launching systems for medical takaful and family takaful in all markets where we operate, to position ourselves to take advantage of the growing available opportunities in the global markets. We have already started family and health takaful operations not only in the UAE but also in Algeria through the Algerian SALAMA subsidiary. Also Saudi IAIC has added health takaful to its activities in Saudi Arabia . Last but not least, a subsidiary has been set up in the Senegal to offer family takaful. This company is in addition to SOSAR which is also a subsidiary in the Senegal . We have also contributed towards raising the capital the Jordanian Islamic Insurance Co, a joint-stock company whose shares are traded in the Amman stock exchange, of whose capital SALAMA owns 15% . The company recently increase its capital by 100% to JOD 8 million.

SALAMA was listed on the Dubai stock exchange in September last year, which allowed raising the company’s paid capital to one billion dirham. SALAMA now includes under its umbrella six takaful companies that provide their services in 70 countries around the globe through Tunisia-based BEST Re which is the largest re-takaful company in the Islamic world. SALAMA acquired full ownership of BEST Re at the beginning of 2006 whose paid capital is US$ 100 million.      

Sheikh Khalid concluded by saying, “Our company shares have recorded strong presence on the Dubai stock exchange following a successful launch of the IPO. The SALAMA shares soon become among the most actively traded shares in the UAE, occupying fourth place during the first nine months of 2006 in the country.