Insurance Sector Projected to Witness Majors Mergers in GCC Soon

Mergers and acquisitions will inevitably happen in the UAE's overcrowded insurance and Takaful industry. According to Vasilis Katsipis, general manager at AM Best, there are several reasons that hamper local insurers and Takaful firms from consolidation. Individuals holding larger stakes in the companies are willing to sell at a much higher price which is not attractive for the buyers. Also, it is not a high priority for the owners either in terms of liquidating assets or in terms of spending time. Katsipis noted that if it is purely for financial reasons, then the market will see some activity in terms of consolidation in the next two years. According to Safder Jaffer, managing director of Milliman, the lack of long-term view of profitability by shareholders, low interest rate environment and lack of expertise continue to be a main challenge for takaful companies.