Hannover Re said it has established Hannover ReTakaful, B.S.C., in Manama, Bahrain, a wholly-owned subsidiary, for worldwide underwriting of retakaful reinsurance business written in conformity with Islamic law.
Hannover Re, based in Hannover, Germany, said it is the first of the major Western reinsurance groups to serve this emerging market with its own exclusively dedicated subsidiary.
"Takaful" is an Arabic term meaning "guaranteeing each other." On the reinsurance side, it is used to designate a business model that resembles the form of a mutual insurance company and makes appropriate allowance 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.
Hannover said this opens up a unique potential for Hannover ReTakaful.
"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 Hannover Re Chief Executive Officer Wilhelm Zeller in a statement.
The company said it received a license in September from the Central Bank of Bahrain (CBB)–formerly the Bahrain Monetary Agency.
"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," explained Rasheed Mohammed Al Maraj, governor at the CBB.
Mahomed Akoob was named CEO of the new company. He served as chief financial officer of Hannover Re's subsidiary in South Africa.
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