The business sells sharia products using Takaful (Islamic insurance) structures.

“Salama has meaningful holdings in a group of national Takaful players in Tunisia, Algeria, Egypt and the UAE,” says Kathy Fear, an analyst at investment bank Morgan Stanley.

“It is well placed to capitalise on the double-digit growth forecast for the Takaful and Retakaful sectors.”

Fear forecasts Salama’s net premiums will grow by 30 per cent this year. Premiums from Takaful insurance products worldwide will grow by more than 20 per cent a year until 2013, according to consultant Ernst & Young.

Salama’s largest subsidiary, Best Re, which generates 75 per cent of its premiums, grew by 19 per cent a year between 2003 and 2007. Amar Hadjloum, managing director of Best Re, expects premiums to grow by 150 per cent in 2008 following growth of 43 per cent last year.

“In the UAE, Egypt and Algeria, increasing Takaful penetration will be key to Salama increasing its market share and will drive revenue growth along with acquisitions and greenfield investments,” says Fear.

Takaful products pool insurance premiums in a single fund and claims are paid out according to need. By pooling the premiums, Takaful avoids paying interest or gambling, both of which are banned under sharia law.

Salama’s UAE Takaful business accounted for 13 per cent of premiums last year, with its Algerian arm providing 8 per cent.

The UAE subsidiary should benefit from a deal it signed with the UAE’s First Gulf Bank to sell Takaful products to its retail customers. First Gulf Bank will sell Salama’s Takaful products to wealthier customers who use its First Wealth retail banking service.

The deal with First Gulf Bank should help Salama increase the proportion of its premiums from family insurance products above the current level of 2 per cent.

Salama also has ventures in Saudi Arabia and Jordan.