Salama to Issue $47.65 Million Mandatory Convertible Sukuk

Islamic Arab Insurance Company (Salama), one of the UAE’s leading Takaful providers, on Friday said that its shareholders have approved a capital reduction and subsequent capital increase as part of a comprehensive plan to restore solvency and reinforce its financial position in line with regulatory requirements of the Central Bank of the UAE.

At the General Assembly held on Thursday, the shareholders approved a capital reduction to offset accumulated losses and cancel treasury shares, Salama said in a regulatory disclosure with Dubai Financial Market (DFM) this morning.

Following completion and final approval by the UAE’s Securities and Commodities Authority (SCA), Salama will proceed, through a special purpose vehicle, with the issuance of up to $47.65 million in Mandatory Convertible Sukuk (MCS) to a select group of strategic investors.

The Sukuk will be mandatorily converted/exchanged into new shares under the approved terms. This capital restructuring marks a critical milestone in Salama’s ongoing efforts to reinforce solvency, ensure full regulatory compliance and provide a stable foundation for future operations.

Salama is one of the world’s largest and longest-established Shariah-compliant Takaful solutions providers with paid-up capital of AED 939 million. Since its incorporation in 1979, it has been a pioneer in the Takaful industry, having won many industry awards and accolades.

Strengthens Balance Sheet

Salama’s Group CEO Mohamed Ali Bouabane said that the approval of capital restructuring plan was an important step toward strengthening the company’s balance sheet and meeting all regulatory capital requirements.

He also said that the continued support of the shareholders and strategic investors reflects strong confidence in the company’s fundamentals and long-term stability.

He said: “Looking ahead, our focus will remain on generating tangible value for shareholders by maintaining strong underwriting discipline, optimising our expense base, strategically deploying capital and delivering superior claims service ensuring Salama remains a simpler, leaner and more resilient organisation.”

The new capital will strengthen Salama’s solvency position and ensure compliance with capital requirements of the Central Bank of the UAE, while supporting its well-diversified portfolio across product lines and geographies providing stability and multiple avenues for sustainable growth.

Salama reported steady financial improvement in the first half of 2025, with total equity rising to $95.8 million, a 5.2% increase compared to the previous year. The company also achieved a net profit of $2.25 million and Takaful revenue of $140.33 million as of 30 June 2025, demonstrating disciplined operations and improved financial performance.

S&P Global Ratings recently affirmed Salama’s long-term issuer credit and insurer financial strength rating at ‘BBB-’ with a Developing outlook, highlighting the Company’s improving fundamentals and progress toward a stronger capital position.

The company’s stability and success can be attributed to its customer-centric approach that keeps its customers and partners at the heart of the business, while staying committed to its Takaful principles.

It is also recognised for providing the most competitive and diverse range of family, motor, general and health Takaful solutions that meet the ever-changing demand of its individual and corporate customers in the UAE and, through its extensive network of subsidiaries and associates, in Egypt and Algeria.