The Dubai Group has sold its Turkish insurance arm to Starr Insurance and Reinsurance Ltd., a company owned by former AIG chief executive Maurice “Hank” Greenberg, and to a unit of Dubai lender Mashreq Bank, as the state investment firm looks to cut its debt load.
Oman Insurance Co (OIC), the unit of Mashreq, said on Tuesday it had bought a 51 percent stake in Dubai Group Sigorta, an insurance company based in Istanbul which writes non-life insurance business.
The remaining 49 percent was acquired by Starr Insurance and Reinsurance, part of Greenberg’s Starr International Co, OIC said. No financial details of the transaction were provided.
Dubai Group, part of Dubai Holding, the personal investment firm of Sheikh Mohammed bin Rashid al-Maktoum, was hit hard by the global financial crisis and has seen the value of most of its holdings decline.
Like most other state-linked entities in the emirate, it embarked on talks with creditors to restructure debt and extend maturities.
Its financial assets include stakes in Egypt’s EFG Hermes, an investment bank hit by Middle Eastern turmoil, and Cyprus Popular Bank, formerly Marfin, whose recapitalization forced Cyprus to seek an international bailout.
Dubai Group also has a stake in Borse Dubai, which owns 20.6 percent of the London Stock Exchange.
Penetration rates for the insurance sector in the Middle East remain low compared with developed markets, with operators under increasing pressure to boost efficiency, roll out new products and explore new markets.
Turkey, the fastest expanding economy in Europe with growth of 8.5 percent last year, is seen as attractive to foreign insurers looking to diversify away from competitive and mature home markets.
Dubai Group Sigorta was formed in 2008. It made a loss of 34.2 million Turkish lira ($18.8 million), according to its 2011 annual report.