Germany’s Hannover Re has established Hannover ReTakaful B.S.C. (c) in Manama, Bahrain, a wholly-owned subsidiary to underwrite worldwide reinsurance in conformity with Islamic law (so-called retakaful business). The action follows up on the license Hannover received in September from the Central Bank of Bahrain (CBB) – formerly the Bahrain Monetary Agency.
Hannover Re indicated that it is the first of the major western reinsurance groups to serve this emerging market with its own exclusively dedicated subsidiary. “Bearing in mind that a quarter of the world’s population are adherents to the Islamic faith, 70 percent thereof are under the age of 35 and the global Islamic insurance market is scarcely developed as yet, we see extremely attractive growth prospects and scope for innovative product design in this area”, noted CEO Wilhelm Zeller.
Rasheed Mohammed Al Maraj, governor at the CBB, commented: “We are sure that the participation of Hannover Re will make a positive contribution to the development of the financial sector of the Kingdom of Bahrain and the region.”
The bulletin also notes that relatively few “Sharia-compliant reinsurers with relatively modest underwriting capacity offer professional protection to the more than 80 takaful insurers active in 20 countries.” Zeller is anticipating that 2006 will see a “doubling of the premium volume for worldwide retakaful business compared to 2004.”
Hannover Re also explained that “‘Takaful’ is an Arabic term meaning ‘guaranteeing each other’. In the (re)insurance industry it is used to designate a business model that resembles the form of a mutual insurance company and makes appropriate allowance, inter alia, for the prohibition of interest income in the Islam.
“Takaful insurers are obliged to obtain reinsurance from a Sharia-compliant retakaful company and may only resort to traditional reinsurance if sufficient retakaful capacity is lacking. This opens up a unique potential for Hannover ReTakaful.”
Hannover Re has appointed Mahomed Akoob as CEO to head the new company. Until recently he served as CFO of Hannover Re’s subsidiary in South Africa. Having worked in the industry for many years, Mr. Akoob has extensive experience in reinsurance business.
“Hannover ReTakaful will write its business across all lines worldwide. The company’s Sharia Supervisory Board, which will regularly review the overall compliance of the company with the principles of the Sharia, includes renowned figures such as Dr. Mohammed Ali Elgari and Hafiz Abdul Nabi Hamidi,” said the bulletin.
It also noted that the new company “has started business operations – in good time for the renewal season – this week. It has an authorized share capital of BHD 50 million (roughly $135 million).”
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