MANAMA: Solidarity Bahrain plans to merge with t’azur Company, creating a sharia–compliant insurance (takaful) provider with a “significantly large portfolio”.
In a filing to Bahrain Bourse (BHB), Solidarity Group Holding, the parent of Solidarity Bahrain, said a letter of intent for the prospective merger has been signed between its flagship subsidiary and t’azur.
The merger would be executed via a transfer of business, assets and liabilities from t’azur to Solidarity Bahrain, in exchange for shares in Solidarity at a mutually agreed swap ratio.
The scope of the proposed merger includes primarily the Bahrain operations (assets and liabilities) of t’azur as well as certain specific assets and or investments relating to its operational presence outside Bahrain.
t’azur was established in 2007 by Unicorn Investment bank with an authorised capital of $500,000,000, of which $58,000,000 is issued and paid-up, says the company’s website.
It provides family and general takaful products for individuals and businesses.
Solidarity Bahrain provides a range of takaful products and operates through five segments: non-motor segment, which includes fire, marine, general accident, liability and engineering lines of business; motor segment which includes insurance for motor vehicles; life and medical expense cover; group life segment which includes group life and credit life business, as well as family takaful.
Its issuer credit rating was upgraded by AM Best in January 2020 to ‘bbb+’ from ‘bbb’, reflecting an improvement in the business profile of its parent company, Solidarity Group Holding.
This was achieved through a stronger competitive position following the integration of Al Ahlia Insurance Company, acquired in 2016.
The rating agency said in a report last month that Solidarity consistently ranks in the top three takaful firms in the kingdom by gross written premium.
AM Best said the Bahraini insurance market – the smallest among the GCC countries – is very competitive, with a large number of companies vying for a limited amount of premium.
In 2018, 36 insurers (24 of which were locally domiciled) competed for approximately $750 million of premium.
Conventional insurance dominates the market, although takaful business has been growing in recent years, accounting for 28pc of the market in 2018, among the highest penetration levels in the region, said the report on Bahrain's insurance market.
Commenting on the planned merger, Solidarity Group chief executive and Solidarity Bahrain vice-chairman Ashraf Bseisu said, “The proposed transaction represents a remarkable feat as it constitutes the second M&A initiative for the group’s subsidiary in Bahrain in a span of three years. Following closely on the heels of recent acquisition and merger of Al Ahlia Insurance, the proposed amalgamation between Solidarity Bahrain and t’azur would create a merged entity with a significantly large portfolio, wide array of products and leverage the synergy between the two operations to enhance value for all stakeholders.”
He also added, “Signing of the LoI represents the achievement of an initial but important landmark and that the Solidarity Group will continue to work with all the stakeholders to help steer the proposed merger towards a timely and successful completion.”
Subject to final regulatory and shareholder approvals, Solidarity Group expects to finalise the merger with t’azur next year.
avinash@gdn.com.bh
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