RAKBank in talks to acquire majority stake at RAK National Insurance

26/07/2014 08:31 AST

National Bank of Ras Al Khaimah, also known as RAKBank, said that it intends to acquire a majority stake in Ras Al Khaimah National Insurance amid a consolidation of the insurance industry in the UAE.

The bank said in a statement to the stock exchange that it is in the process of negotiating the details with the regulators, including the Securities and Commodities Authority and the Abu Dhabi Securities Exchange.

The government of Ras Al Khaimah owns stakes of slightly less than 50 per cent in both RAKBank and Ras Al Khaimah National Insurance.

“The bank, on a suitable time, will further disclose the impact of the acquisition on the bank’s financial statement,” it said, without elaborating.

A spokesperson for the bank was not immediately able to provide more details.

The country’s economy boomed last year, growing more than 5 per cent, as business confidence prompted an increase in demand for credit, stocks and property. The economic renaissance coincided with a new law requiring compulsory health for all Dubai residents. Initiated by the Dubai Health Authority, the legislation was signed into law in November by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, and came into effect last week.

As the UAE’s economy heats up, driven in part by workers escaping the anaemic global growth, the competition for insurance customers is intensifying and offers are proliferating from everything to car, life and even mobile phone insurance.

Many banks team up with insurers in what is known as bancassurance to offer customers products from established insurers.

The accounting firm PwC said in a report earlier this year that the Middle East insurance market had signi?cant potential for growth, with an average penetration of just 0.3 per cent in life insurance and 1.1 per cent in non-life insurance in 2012.

The report noted that life insurance was particularly underdeveloped in the UAE and Saudi Arabia and predicted that the industry would experience a wave of mergers and acquisitions.

The National