Arig will manage Takaful Re, which will start operations underwriting property and family business by the end of 2005. The new company is expected to hold a public share offering in the next two-three years.

'We are looking at niche areas and there are about 75 Islamic insurance companies but no sizeable re-insurance company. We saw a gap in the market,' Arig chief executive officer Udo Krueger said in Dubai on 19 September. 'There are two-three smaller re-takaful companies but they are not sufficiently capitalised to go global. We have first-mover advantage and do not have to establish new infrastructure to get started.'

The re-takaful market was estimated to be worth $600 million in 2003 but has been witnessing double-digit annual growth. Arig has plans to expand regionally and has identified Saudi Arabia and Iran as key markets.

There is growing interest in the Islamic insurance sector. In mid-September, UAE-based Islamic Arab Insurance Companyannounced plans to establish a re-takaful business in Saudi Arabia.