London Sharia Compliant Guaranteed and Compensation Insurance Policy

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“We estimate that Takaful insurance represents about 2% of the $ 1.8 trillion Islamic finance market – we now have an M&A insurance product that can serve this growing market.”

AIG UK has announced that it has taken out the first Sharia-compliant Guarantee and Indemnity (W&I) insurance policy issued in the London M&A insurance market. The brokers, Risk Capital Advisors, placed the GBP 5,000,000 W&I policy which was issued through Cobalt Underwriting’s “Islamic Window” solution.

Angus Marshall, AIG’s Head of Mergers and Acquisitions for the UK and London Market, said: “AIG was delighted to work with our strategic partner, Cobalt Underwriting, to deliver a revolutionary W&I insurance policy compliant with principles of Sharia law. While AIG has previously issued W&I policies against Sharia law in the Middle East, we have not done so in the M&A insurance market in London.

“We estimate that Takaful insurance represents about 2% of the $ 1.8 trillion Islamic finance market – we now have an M&A insurance product that can serve this growing market.”

The buyer was a Gulf-based financial institution operated under Sharia law. They acquired an industrial property in the north of England for an amount in excess of 24,000,000 GBP. The investor sought Sharia-compliant financing to fund the acquisition and asked RCA to put in place a Sharia-compliant W&I policy – all elements of the transaction necessary to comply with Sharia principles.

Ben Brindle, Director of Risk Capital Advisors, said: “We are seeing an increasing demand for W&I insurance from financial institutions managed according to Islamic principles. This is particularly the case in the UK, and we were very happy to be able to provide a solution to the buyer on this transaction with a Shariah compliant policy issued in the UK.

Sheikh Zubair Miah, Sharia Specialist at Cobalt Underwriting, said: “This is a very important and positive step in the right direction for those involved in Islamic finance, who are working extremely hard to ensure that their businesses companies are Sharia-compliant, but previously had difficulty finding suitable Sharia-compliant insurance products. Now, through our work with AIG, we have such a product that is not only highly rated, but is Shari’a Compliant ”.

Islamic Cobalt Window, endorsed by Islamic scholars, draws on the expertise of Sharia scholar Sheikh Zubair Miah, who reviews and administers the insurance policy allowing investors to insure transaction risks in full compliance with the principles of Sharia.

Sheikh Zubair follows a three-step process to ensure that the policy is Shari’ah compliant: first, the risk is examined to establish that the risk itself is not prohibited by the Shari’ah . Second, the policy issued does not stipulate, infer or impose any act or condition that would violate the principles of Sharia law. Finally, the insurance policy is endorsed and certified to reflect this process.

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