Aug 09 2012
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ONIC starts dialogue for JV takaful firm
ONIC Holding has already received an 'in principal' approval from the Capital Market Authority (CMA), after the government decided to allow Islamic banks and insurance firms.
However, a licence will be given only after the regulating authority announces a separate set of rules for Sharia-compliant insurance firms and Islamic debt instruments like sukuks.
Sources said that the proposed joint venture takaful insurance firm will have two or three partners, and one of them will be a regional player, who has an expertise in Islamic insurance.
Sources also noted that ONIC may not take a majority stake in the proposed takaful insurance firm due to a non-competition clause in an agreement with Royal and Sun Alliance (RSA) at the time of merging Al Ahlia Insurance with the latter.
"We have to see how the capital structuring works out. We will see whether the terms and conditions suit us,- said a source, adding: "By the end of the year, the company will be able to finalise the joint venture deal.-
The insurance market regulator CMA has given 'in principal' approvals to three companies, including Al Madina Insurance for establishing takaful firms. Al Madina Insurance Company is planning to convert the company into a takaful company.
The group is planning to offer life, medical and non-life takaful products in the country.
The minimum capital for a takaful company is envisaged at RO10 million and it needs to have a three-member board. The companies, including conventional insurance firms, planning to enter takaful business have to seek a separate licence and form a separate company. Insurance business is a focused area for ONIC as it has sizable stakes in insurance firms in Oman and in the region.
These include a 99 per cent holding in National Life and General Insurance Company, 20 per cent stake in Al Ahlia Insurance (which is part of RSA group) and a 20 per cent stake in the UAE-based International General Insurance.
Meanwhile, the UK-based law firm Clifford Chance, which was appointed by CMA, has submitted a draft law for forming Sharia-compliant takaful insurance firms and sukuk debt instruments. A final draft will be ready within a month or so. The consultant has suggested for standalone companies for Sharia-compliant takaful business, which is against window operations to be allowed in the banking sector.
ONIC also said that it is in an advanced stage of evaluating a potential investment in healthcare sector. The group is also in the process of developing two pieces of land it owns, at an estimated cost of RO4 million. ONIC Holding as a group has achieved more than ten times growth in net profit at RO2.16 million for the first half of this year, over the same period of last year.
The gross premiums grew by 35 per cent compared to previous year. The premium growth was largely in medical insurance business in Oman and the UAE.
Performances of associates were in line with expectations. The share of profits from associates for the period was RO2.04 million compared to RO1.99 million for the same period in the previous year.
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