Friday, Dec 08, 2006

FRANKFURT (Dow Jones)--Reinsurer Hannover Re AG (HNR1.XE) expects its new Bahrain-based unit for reinsurance compliant with Islamic Sharia law to contribute around $100 million in premium income to the group in 2010, Hannover Re spokeswoman Gabriele Handrick said Friday.

That compares with $7 million Hannover Re generated in such business in 2005, the spokeswoman said.

Earlier Friday, Hannover Re said it has established Hannover ReTakaful BSC in Manama, Bahrain, a wholly-owned unit for the underwriting of worldwidereinsurance that complies with Islamic Sharia law, also known as retakaful business.

Hannover Re said it is the first of the large western reinsurers to set up a subsidiary for a worldwide retakaful reinsurance business for the more than 80 so-called takaful insurers that operate in 20 countries.

The new company, which started business operations this week, had already received a business license in September from the Central Bank of Bahrain, Hannover Re said.

Hannover Re sees attractive growth prospects and scope for innovative products in this area, Chief Executive Wilhelm Zeller said in a statement earlier Friday. He pointed out that a quarter of the world's population adheres to the Islamic faith and that the global market for Islamic insurance isn't yet very developed.

Zelleradded that the company expects overall premium volume in the worldwide market for retakaful reinsurance business to double in 2006 compared with 2004.

Hannover Re expects total premium volume for worldwide retakaful business to rise to $570 million in 2006, up from $440 million in 2005 and $280 million in 2004, Hannover Re spokeswoman Handrick said.

Company Web site: http://www.hannoverre.com

-By Ulrike Dauer, Dow Jones Newswires; +49 69 29725 500; ulrike.dauer@dowjones.com

(END) Dow Jones Newswires

08-12-06 1555GMT