MANAMA (Reuters) - Solidarity, the world's largest Islamic insurer by capital, said on Monday it planned to sell shares to the public before the end of next year to help finance expansion in North Africa and Europe.
The Bahrain-based firm could raise about $55 million by selling shares in an initial public offering to increase its paid-up capital to $275 million from $220 million now, Chief Executive Sameer al-Wazzan said.
Islamic insurers tend to be much smaller than their conventional rivals as the industry is just gathering momentum, surmounting hurdles including the belief among many Muslims that buying insurance demonstrates a lack of faith.
Solidarity shares will be listed on Bahrain's stock exchange, he said.
"We need capital for us to expand geographically," Wazzan told the Reuters Islamic Finance Summit. "By the end of 2009 we will need $275 million in capital."
Solidarity is in advanced stages of starting operations in the United Arab Emirates and Egypt, Wazzan said. The firm now operates in Bahrain, Saudi Arabia, Qatar, Oman, Jordan, Malaysia and Luxembourg, he said.
In Islamic insurance, or takaful, risk and reward are shared between the customer and the insurer, unlike in conventional insurance, where the insurer takes on all risk and receives a premium.
Solidarity plans to convert into a holding company and operate two subsidiaries offering family insurance and general insurance, he said. "That will give us flexibility in our expansion," Wazzan said.
Solidarity wants to expand in Europe by tying up with existing financial institutions looking to offer Islamic insurance, he said, without being more specific.
Europe and the United States would account for about a third of the Islamic insurance market by 2020, according to Solidarity estimates.
Solidarity has raised capital twice since setting up in 2003 through the sale of shares to existing shareholders and a private placement, Wazzan said.
Abu Dhabi-based Islamic insurer Mithaq Lil-Takaful said last month it would raise about $22.46 million in an IPO ending this month.
(Reporting by Daliah Merzaban, editing by Will Waterman)
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