Absa Buys Islamic Insurance Group Takafol South Africa

September 12 - The only solely Islamic insurance group in the country, Takafol South Africa, has been acquired by the Absa Group, it was revealed this week.  What was not publicised was the acquisition sum.

Takafol's acquisition was confirmed by the bank just before the weekend.

Although Islamic insurance takes up only one percent of the total global market, it is growing in numbers in places such as Malaysia and Indonesia, with more and more Muslims showing an interest in taking out insurance products that are compliant with their religion.

Ernst and Young said that global contributions to Islamic insurance products will reach around $12 billion by the end of this year - an increase from $9.15 billion last year.

According to Business Day, South Africa's Islamic insurance market generates approximately R3 billion a year.

Takafol South Africa was founded in 2008, when AIC began underwriting its South African business, and since then the group's SA personal lines and commercial business have grown by over 66%.

Absa to grow Islamic insurance market

The South African executive of Takafol South Africa, Uwaiz Jassat, who will head the new Absa unit, said that Absa hopes to expand into this niche market in other countries across the African continent once it successfully incorporates the new group under its umbrella of brands.

The Managing Director of Absa Insurance, Edwyn O'Neill, said: "This deal demonstrates Absa's commitment to provide the Islamic community with a holistic financial services offering that is Shari'ah compliant.  Today, we cement our relationship with the Islamic community and recognise that there is a need for similar products in the rest of Africa."

Jassat added: "The global Takafol and Re-Takafol industry is experiencing significant growth. The principles of mutual or joint guarantee are the foundations of Takafol and play a significant role in the economic and social development of societies."

The MD of Absa Islamic Banking, Amman Muhammad said that the acquisition provides the company with an opportunity to significantly grow in South Africa and the rest of the continent. He said that Absa Takafol would see Absa expand its service offering beyond banking and provide customers with "an unparalleled Islamic value proposition."