The first merger among local insurance companies in more than a decade is anticipated to happen early next year, official sources said on Sunday.
The United Insurance Company and the Arab Jordanian Insurance Group (AJIG) are negotiating the mechanism under which the deal will be concluded, the sources added.
“The two firms have signed preliminary agreements, and will create committees to evaluate the two companies,” said Raouf Abu Jaber, United's board chairman and president of the Jordan Federation of Insurance Companies.
He added that the results of the evaluation would be ready before the deal is finalized in early 2001.
AJIG was not available for comment.
“We seek to have more solid insurance units to stand up to economic developments in the insurance industry,” Abu Jaber told the Jordan Times.
The initiative is in line with repeated calls by officials to form stronger insurance units instead of small sized entities, better equipped to compete and strengthen their financial positions.
The Insurance Regulatory Commission held a number of meetings to encourage and facilitate mergers within the insurance industry.
“We are very supportive of any step that might lead to mergers,” said Bassel Hindawi, the commission's director general.
“Mergers are a strategic option to restructure businesses, helping companies provide better services and enabling them to retain more of the premiums locally,” added Hindawi.
Since the late 1980s, only two takeovers were conducted among Jordanian insurance firms. The most recent was the Jordan French Insurance Company's (JOFICO) acquisition of 60 percent of the Universal Insurance Company.
The local insurance market boasts 27 companies, whose invested capital amounted to JD70 million last year. — ( Jordan Times )
By Rana Awwad
© 2000 Mena Report (www.menareport.com)
