Takaful Emarat has agreed a deal to buy Al Hilal Bank's takaful unit in a cash deal it said will create the biggest Islamic insurance business in the United Arab Emirates, based on 2016 figures.

In a press release announcing the deal to the Dubai Financial Market on Tuesday, Takaful Emarat said the transaction would be settled in cash, but it did not disclose how much it is paying for the business. It said the deal has received initial approval from the UAE's Insurance Authority.

The release said the deal would bring together two "highly complementary" businesses as Takaful Emarat's customers are mostly in Dubai or the Northern Emirates and buy life or health cover, while Al Hilal Takaful has a general licence and its individual and corporate clients are primarily in Abu Dhabi. Between them, the businesses wrote gross written contributions of more than 900 million UAE dirhams ($245.1 million) last year.

Despite the initial approval granted by the UAE Insurance Authority, Takaful Emarat said that the deal remains "subject to full regulatory approvals". It is due to complete in the first quarter of next year.

Mohammad Al Hawari, executive board member and managing director of Takaful Emarat, said: “This is a transformational deal for Takaful Emarat that will drive growth for the group through a wider range of takaful services and a larger customer base.

"In parallel, we are making strong progress in developing our digital platform, which will mean a highly efficient and cost effective service for our customers. Al Hilal Takaful, a well-established and complementary business, is a very good fit for us.”

Alex Coelho, chief executive officer of Al Hilal Bank, described Takaful Emarat as "a specialist takaful provider and is therefore the most appropriate acquirer for our insurance business".

"We are working closely together to ensure a smooth transition for all our insurance customers,” he added.

(Writing by Michael Fahy; Editing by Shane McGinley) (michael.fahy@thomsonreuters.com)

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