First Insurance's shareholders back merger procedures with Yarmouk

AMMAN — First Insurance Company will be proceeding with procedures to merge with Yarmouk Insurance Company, following the authorisation of shareholders.

During an extraordinary general assembly meeting at the end of last month, the shareholders empowered the board of directors to communicate with the Ministry of Industry, Trade and Supply/Insurance Department in order to obtain the approvals  necessary for the merger.

Board Chairman Ashraf Bseisu told the shareholders that First Insurance  bought 76.25 per cent of Yarmouk shares on April 2, 2015 with the aim of a merger.

He indicated that First Insurance, since established, has progressed noticeably and, in order to expand and build up business activity, merger and acquisition became imperative.

"Accordingly, the company conducted studies on available opportunities in the Jordanian market, and decided to acquire 76.25 per cent of Yarmouk capital after examining Yarmouk's portfolio of assets and capital," Bseisu said.

He described Al Yarmouk as a deep-rooted, reputable, and highly regarded company that is financially sound with a licence to provide life insurance, a service that First Insurance lacks.

The chairman also mentioned that Yarmouk was not  involved for several years in auto insurance and, as such, was able to maintain a stable insurance portfolio.

He stressed that the merger would strengthen the company's drive for  growth on all levels, especially business activity and profitability.

Asked why the company did not propose dividend distribution to shareholders, Bseisu said that a specialised committee  is to be formed by the Ministry of Industry, Trade and Supply/Insurance Department would carry out an evaluation of both entities and their share prices.

"Subsequently, retaining the profit would strengthen the financial position of First Insurance," he added.

Responding to other questions, the chairman described Yarmouk's investment portfolio as traditional indicating that there is a plan, under the supervision of a Sharia control commission, to covert the portfolio into Sharia-compliant investments during a period to be specified at a later stage.

Bseisu indicated that Yarmouk will be holding an extraordinary general assembly meeting during which shareholders will be asked to endorse its transformation into an Islamic insurance company. 

According to the 7th annual report of First Insurance, net profit after tax at the end of last year amounted to JD1.4 million, described by the company as the best in terms of growth in profit and volume of premiums.

The report showed that cash at hand and at banks totaled JD24.2 million, or 59.2 per cent of the JD41 million in total assets.