Takaful Insurance being Liquidated
19 Feb 2003|
By Stanley Carvalho
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Takaful Insurance Company - launched through an IPO last year to provide Islamic insurance - is being liquidated.
The decision to wind up the company's operations was ratified on Monday evening at an extraordinary general meeting. The accounting and consultancy firm, Talal Abu- Ghazaleh Organization, has been appointed the official liquidator. Abdullah Al Masood, Chairman of Takaful Insurance, assured shareholders that their money will be reimbursed once the liquidation is completed. Takaful Insurance Co was set up with a capital of Dh50 million in April, 2002, but the company never became operational. Analysts said the decision to liquidate the company was a step in the right direction and was prompted by competition and investment risks. "The main reason for Takaful's winding up, I think, is the profitability and viability factor. The company board must have realized that competition is intense in the insurance sector and, although Takaful would focus on Islamic insurance, it would still not be a profitable venture," said an Abu Dhabi-based analyst tracking the insurance sector. "So instead of starting operations and closing after one or two years, it is better not to begin at all," he added. An equity analyst said that although the company launched an IPO and raised capital, the subsequent feasibility study of the market showed it was not a viable venture. Besides, Dubai Islamic Bank (DIB) and Abu Dhabi Islamic Bank (ADIB) announced plans to set up insurance companies. "Basically, it was the fear of competition from the subsidiaries of these big banks that probably made Takaful decide not to become operational at all. It seemed too risky and unprofitable to compete with DIB or ADIB although Takaful saw a need for Islamic insurance when the idea was conceived." |
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