The Board of British Islamic Insurance Holdings (BIIH) announced its decision to increase its currently paid up capital from £19 million to £50 million through a Private Placement with sophisticated high net worth individuals, corporate and institutional investors in the UK and the GCC region. The Private Placement is expected to take place after the Company has completed the relevant regulatory notification requirements for placements in the GCC countries.
BIIH increased its paid up capital to £19 million in the summer of 2006 when twenty institutional and high net worth investors from the GCC region joined as Founder Shareholders of the Company. It was envisaged at the time of the First Private Placement in the summer of 2006 that the Company would increase its capital at the time of listing on AIM at the London Stock Exchange after it has received its regulatory approval from the FSA.
During the past twelve months, Gulf Ventures Corporation, the principal business advisor to the Company, has worked with international legal, regulatory, actuarial and takaful consultants in preparing a regulatory application that was first reviewed and approved by the BIIH Board and then submitted to the FSA in May 2007. The Board of BIIH has reviewed the regulatory business plan and, based on input from actuarial consultants, decided upon a launch capital of £80 million. The Board also decided to raise the additional capital in two tranches: (i) through a Private Placement in the UK and Gulf region during the summer of 2007; and (ii) through additional fundraising closer to the launch of the Company’s business in the first quarter of 2008.
Explaining the rationale for the increase in capital, Chairman of the Board of Directors of BIIH, Mr Abdulaziz Hamad Aljomaih said, “Our market research highlighted a bigger opportunity for takaful products in the UK than we had envisaged earlier. This is reflected in the regulatory business plan submitted to the FSA and has highlighted the need for a strongly capitalised takaful company in the UK. The targeted capital would make BIIH one of the largest takaful companies worldwide”.
Commenting on the expected Private Placement during the summer of 2007, the Chairman said: “BIIH intends to issue New “A” Shares to sophisticated private and institutional investors on receipt of ‘Minded to Authorise’ notification from the FSA. The new investors will invest in the Company’s shares with the knowledge that the Company’s regulatory application has been reviewed and the FSA is willing to grant the Company a regulatory license, subject to the Company meeting conditions specified in the FSA notification.”
BIIH is finalising the financial advisory contracts with a reputable international investment bank in the UK and with a leading GCC merchant bank. On completion of these contract negotiations shortly, the Company will announce the appointment of its financial advisors in the UK and in the GCC region.
This press release is directed solely at persons outside the United Kingdom and it must not be acted upon by persons in the United Kingdom.
BIIH, in an innovative move, will be the first company to offer Shari’a compliant insurance products to the British Muslim population from an FSA-authorised and regulated, stand alone Islamic insurance company. Following the formation of the company in 2006, £19 million (approximately $38 million) was raised from institutional and private investors in the Gulf Region who subscribed for shares in BIIH following a Private Placement which took place during the summer of 2006. An additional £1 million committed for subscription by the Core Founder at the time of FSA Permission takes the total committed capital to £20 million.
BIIH has a vision to become the Islamic insurance partner of choice for Muslims in the UK and Europe, following strong research which shows a substantial market potential for a Shari’a compliant insurance offer from a focused and trusted Islamic insurance provider. The business has also identified opportunities to use a Takaful based insurance solution for the fast growing ethical market.
The UK insurance industry is the largest in Europe and the third largest in the world after the USA and Japan. The UK’s annual per capita insurance spend is approximately £2,500 (US$5,000), which is the second highest in the world after Switzerland (as of 2005). Most people in the UK purchase some form of insurance and over 60% of households in the UK subscribe to home-related insurance, while more than 70% are covered for motor insurance. A comparison of the insurance penetration in the UK with that of the GCC region suggests that the UK’s per capita insurance premium in 2005 was 35 times more than that of the GCC region. In 2005, total general insurance premiums in the UK were £32.2 billion (US$64 billion) and long-term insurance premiums were £100 billion (US$200 billion) .
A UK survey conducted by BIIH indicated a strong preference for Shari’a compliant insurance solutions amongst UK Muslims with 50% responding that they are ‘extremely likely’ or ‘very likely’ to buy Motor Takaful as long as all aspects of the policy, including cost and level of cover, are comparable with their existing conventional insurance policy. A further 26% said that they would be ‘fairly likely’ to buy Motor Takaful. The corresponding figures for Household Takaful were 46% and 28% respectively.
British Islamic Insurance Holdings has its offices in Central London. Its creation was led by Gulf Ventures Corporation (GVC), Bahrain. GVC worked with a number of leading international consulting firms and project managed the FSA regulatory application preparation process from conception to completion. GVC worked with Ernst & Young and KPMG in the UK, and Mercer Management Consultants provided takaful advisory services. Norton Rose provided legal advise and GVC worked with one of Europe’s premier actuarial consultants, EMB Consultancy. GfK NOP, a leading market research company, helped GVC in conducting primary research in the UK to assess the interest of British Muslim population in a takaful proposition in the UK.
