AIG UK has underwritten the first Shariah-compliant Warranty and Indemnity (W&I) insurance policy issued in the London M&A insurance market, through Cobolt Underwriting’s ‘Islamic Window’ solution.
The buyer of the £5 million W&I policy is a Gulf based financial institution run on Shariah principles, which sought out Shariah-compliant financing to fund the acquisition of an industrial property in the North of England for a sum in excess of £24 million.
The investor requested brokers Risk Capital Advisors (RCA) place a W&I policy with all elements of the transaction in compliance with Shariah principles.
Ben Brindle, Director of RCA, said there’s been increased demand for “W&I insurance from financial institutions run on Islamic principles. This is particularly the case in the UK, and we were very pleased to be able to provide a solution to the buyer on this transaction with a UK-issued Shariah-compliant policy.”
“This is highly significant and positive step in the right direction for those involved in Islamic finance, who work extremely hard to ensure their business activities are Shariah compliant, but who have previously struggled to find appropriate Shariah-compliant insurance products,” said Sheikh Zubair Miah, Shariah Scholar at Cobalt Underwriting; “Now thanks to our work with AIG, we have such a product that is not only highly rated but is Shariah-compliant.”
Cobalt’s Islamic Window, approved by Islamic scholars, draws on the expertise of Shariah scholar Sheikh Zubair Miah, who reviews and administers the insurance policy enabling the investors to insure transaction risks in full compliance with Shariah principles.
Sheikh Zubair follows a three-step process to ensure the policy is Shariah compliant: The risk is reviewed to establish that the risk itself is not prohibited by Shariah, the policy issued does not stipulate, infer or impose any act or condition that would contravene the principles of Shariah, and the insurance policy is endorsed and certified to reflect this process.
Angus Marshall, AIG’s Head of M&A, UK and London Market, commented; “AIG was delighted to work with our strategic partner, Cobalt Underwriting, to provide a ground-breaking W&I insurance policy in compliance with Shariah principles. While AIG has previously issued Shariah-complaint W&I policies in the Middle East, we have not done so in the London M&A insurance market.
“We estimate that Takaful insurance accounts for around 2% of the $1.8 trillion Islamic finance market – we now have an M&A insurance product that can service this growing market.”
