Takaful Emarat: A Shift in Foreign Ownership Limit

Takaful Emarat - Insurance PSC, a U.A.E based insurance company, recently announced a significant change in their foreign ownership policy. In a communication to Mr. Hamed Ahmed Ali, the CEO of the Dubai Financial Market, the company revealed that the foreign ownership limit in the company's capital has been increased from 25% to 49%. This change is in accordance with Article 7 of the company's articles of association and will be effective from March 27, 2024.

The decision to increase the foreign ownership limit could potentially attract more foreign investors to the company. This is a strategic move that might be aimed at increasing the company's market cap which currently stands at 77,700,000. However, the company's recent yield performance raises some concerns. The 3 Month Yield is at 0.32% while the 1 Month Yield stands at -0.11%. These figures indicate a decline in the company's short-term profitability.

The company's core activities include Takaful Insurance Activities in Health Insurance, Life Insurance and Credit & Saving Insurance in accordance with the Islamic Sharia’a. Despite the potential foreign investment, the future of the company seems uncertain. The declining yields and the challenges in the insurance market, particularly in the health and life insurance sectors, pose significant risks.

While the increase in foreign ownership might provide a short-term boost, the long-term sustainability of the company remains questionable. Investors need to consider these factors before making a decision. Given the current market conditions and the company's performance, a cautious approach would be advisable.