UAE Law and Practice Contributed by: Raghad Hammad and Huda Al Zein, BLK Partners
4. Transaction Activity 4.1 M&A Activities Relating to Insurance Companies Mergers and acquisitions in the UAE insurance sec- tor are currently in a phase of strategic consolidation, driven by stricter regulatory standards and policy- driven focus on sector resilience, scale and financial soundness, enabling insurers to compete effectively at a regional and international level. The market is witnessing a steady rise in deal volume as the sector matures, moving away from a historically fragmented landscape towards one dominated by larger, more capitalised entities. Market Activity and Investment Trends The level of M&A activity is currently moderate but accelerating, characterised by a shift towards mid- market, high-impact deals. Following the integration of the Insurance Authority into the CBUAE, several smaller insurers have found it challenging to meet increased capital requirements and the requirement to implement complex accounting standards (includ- ing IFRS 17). This has triggered a “consolidate or exit” environment, particularly within the Takaful (Islamic insurance) segment. Inward investment remains a pri- mary driver, as international groups frequently target local mainland firms to gain an immediate “onshore” footprint without the multi-year wait for a new licence. Conversely, outward investment is led by UAE-based sovereign wealth funds and major national insurers, which are aggressively acquiring stakes in interna- tional brokerage and specialised underwriting firms to diversify their portfolios. Types of Investors Activity is driven by three main groups: strategic cor- porate buyers from within the GCC seeking to scale regional operations; sovereign wealth funds (such as ADQ and Mubadala), which view insurance as a foundational pillar of the UAE’s non-oil economy; and private equity firms. Private equity is increasingly targeting the insurance intermediary and third-party administrator space, where digital transformation and “buy-and-build” strategies offer high growth potential. These investors are particularly focused on “insurtech” to modernise legacy platforms and streamline cus- tomer acquisition.
reinsurance regulations and eligibility requirements, including regulatory supervision in their home jurisdiction and financial strength criteria, as deter- mined by the CBUAE from time to time. • Brexit Impact: There is no specific treaty for UK insurers following Brexit. UK companies are treated as “third-country” foreign companies, requiring a full CBUAE licence for onshore insurance activity or a presence (authorisation) in the DIFC/ADGM to interact with the UAE market within the scope of the relevant free-zone regulatory perimeter. Financial Free Zones (DIFC and ADGM) The DIFC (regulated by the DFSA) and ADGM (reg- ulated by the FSRA) offer more flexibility, including 100% foreign ownership. However, these licences are geographically and regulatorily limited: • A DIFC/ADGM insurer can only cover risks within the relevant free zone or outside the UAE. • They may participate as reinsurers in respect of onshore UAE risks subject to applicable CBUAE and free-zone regulatory requirements. 3.2 Fronting Fronting is a pillar of the UAE market but is subject to new enhanced prudential and supervisory scrutiny introduced in 2025 to prevent local insurers from act- ing as mere conduits. Fronting arrangements are commonly used in the UAE insurance market, but the CBUAE now closely moni- tors reinsurance reliance, risk retention and concen- tration levels. Under the 2025 Law, the CBUAE can intervene if an insurer’s reinsurance strategy relies too heavily on a single overseas counterparty, potentially triggering supervisory measures, including additional capital or governance requirements. Additionally, brokerage regulations mandate that pre- miums for “fronted” policies must be paid directly to the local insurer, which then remits the share to the overseas reinsurer. Brokers are no longer permitted to hold these funds in their own accounts. Brokers are generally prohibited from holding insurer premiums in their own accounts, except to the extent expressly permitted under applicable CBUAE rules.
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