Green Crescent Insurance’s Dh100 million lifeline comes into effect
Green Crescent Insurance’s tie- up with Axa Insurance and Kanoo Group is set to provide a boost to the Abu Dhabi company amid fierce competition in the sector.
Green Crescent said yesterday on the Abu Dhabi Securities Exchange that its partnership with the local investment conglomerate the Kanoo Group and France’s Axa Insurance, first announced in February, had officially come into effect.
A spokeswoman for Green Crescent confirmed that the two parties had invested Dh100 million in the insurer through a convertible bond on Tuesday. The bond will convert to 100 million shares valued at Dh1 apiece within 12 months, increasing the insurer’s capital to Dh200m.
The exact split of investment in the bond between Axa and Kanoo Group was not disclosed. Axa is prohibited from owning more than 25 per cent in the company because of foreign ownership restrictions on insurance companies.
The partnership – which was approved by regulators in May – will involve Hassen Bennour, Axa’s former head of strategy and corporate development in the Arabian Gulf, taking over as Green Crescent’s new chief executive.
“This investment will pave the way for Green Crescent to expand its life insurance business while optimising its product offering in the health insurance segment,” Green Crescent said.
The partnership comes as local insurers struggle to survive in a competitive and cut-throat market. The UAE had 60 insurance companies active at the end of last year, including 34 Emirati institutions, according to the Insurance Authority.
In such a highly competitive market, insurers have had to operate at very fine margins – in many instances offering premiums below their true cost – to win market share. Growing populations and a rising tide of claims have strained insurance companies’ bottom lines, with several being hit hard by the financial crisis of 2008.
Green Crescent – founded in 2008 – was brought to the edge of dissolution in 2012, but opted to keep business going by cutting its capital by more than half to Dh100m.
Under the restructuring deal, the company cut its operational expenses and focused on securing more premiums. Green Crescent managed to trim its annual losses to Dh4.7m last year, compared with a loss of Dh17.4m in 2012 and Dh43.8m in 2011, and has achieved profitability in five of its last seven quarterly results.
Green Crescent’s shares closed unchanged at 93 fils. The stock has fallen 28.5 per cent so far this year.
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