Egyptian Takaful Life Premiums Grew 280% In FY 2011/12
Hisham Abdel Shakour, Managing Director of Egyptian Takaful Company (Life), revealed to Amwal Al Ghad the mechanisms adopted by the company which have led to achieving high growth rate valued at 280% in FY 2011/2012 during which the company was restructured, products were developed and geographical expansions were made in the Egyptian market as the company increased its branches from one to nine and increased the number of representatives from 30 to 300.
The Egyptian Takaful Company (Life) increased its capital by EGP 40 million to register EGP 100 million last October and built up four investment portfolios in FY 2011/2012.
What are the business results of the Egyptian Takaful Company (Life) in FY 2011/2012?
The initial indications showed that the company had premiums of EGP 45 million in FY 2011/2012, compared to EGP 16.6 million. The value of due compensations reached EGP 14 million. Group insurance contracts accounted for 70% and individual insurance contracts accounted for 30% of premiums.
The Company targets to achieve premiums growth rate of 300% in order to acquire EGP 150 million worth of premiums in FY 2012/2013.
What are the company’s strategy and development mechanisms that contributed to achieving growth rate above 280%?
The Company’s main target is acquiring the first rank among Takaful insurance companies. The Company adopted three main mechanisms which contributed to achieving such high growth rate. Firstly, the company is offering products catering to the needs of our customers. The Company offered seven packages and targets to launch many other insurance coverage products with the aim of meeting the customers’ needs.
The Company was previously offering insurance coverage products against physical disability and death as well as investment insurance policy. The Company has set a plan to offer unique multi-coverage insurance packages.
Secondly, the Company focused on geographical expansions as it increased its number of branches from one to nine by launching other branches: as such three branches in Cairo and five ones in Alexandria, Upper Egypt, Delta, Ismailia and Assiut.
Thirdly, the company developed its marketing body by increasing the number of representatives from 30 to 300 well-trained representatives.
What is the company’s plan in the coming five years?
The company aims at achieving annual growth rate ranges between 200% and 300% within the coming five years and targets to achieve EGP 800-850 million in FY 2017-2018.
We always work for attracting new clients, as 31 insurance companies are competing on 1% of the society, so we seek opening new markets and looking for new mechanisms to get to the clients.
What is the value of the company’s issued, authorized and paid-up capitals? Does the company aim at raising its capital in the coming period?
The company’s authorized capital is EGP 500 million; the current paid-up capital is EGP 100 million, as EGP 40 million were injected last October.
As per the company’s issued capital, it is almost EGP 500 million, and at the current period the company doesn’t seek any capital increase.
Will the company sell insurance policies via internet? And does it use new methods to get the premiums?
In the coming period the company will start selling the insurance products via the internet, immediately after preparing the price list of the insurance packages.
As per how to get the premiums, the company has signed two contracts for getting the insurance premiums through Fawry Co. and Egypt post.
What are the latest insurance processes that the company has conducted?
The company provided insurance coverage on the pilgrims, about 100,000 ones. The value of the coverage reached EGP 20,000 per individual, while the insurance total value amounted to EGP1.2 billion.
What is your comment on the rumors which say there are obstacles that threaten the company’s cooperation protocol with the Bar Association?
Well, those obstacles exist no more. The major obstacle was that the Bar did not stick to the agreed number of clients; this was due to the fact that the Bar has internal contracts which shall be expired by next December. The cooperation protocol should have come into effect last July.
Accordingly, we came up with a conclusion that the Egyptian Takaful Company (Life) shall run the Bar till next December; the actual insurance activity would start by the beginning of 2013.
Egyptian Takaful Company (Life) is the first insurance firm to sign cooperation protocols with syndicates. The problem is that syndicates do not have the sufficient data, so running the Bar till next December would enable us to define the actual consumption volume.
Egyptian Takaful Company (Life) is also planning to sign more cooperation protocols with two further syndicates within this September.
Are there any plans to offer new products and packages?
Actually, the company is planning to launch new products after the Holy month Ramadan. The company has already obtained the Egyptian Financial Supervisory Authority (EFSA)’s approvals.
Our new products and packages shall include offering our clients the opportunity to perform Hajj (Islamic pilgrimage to Mecca) after passing five years from signing the contract. In case of death, the client can nominate one of the family members to do the Hajj. This package will cover all the costs and conclude all the necessary procedures including visa, hotel reservation, accommodation, and tickets.
What are the main obstacles that face the insurance market in Egypt?
The obstacles that face the Egyptian market is the lack of awareness about insurance among many segments of Egyptian society and the absence of a legislation organizing the investments of Takaful insurance companies, given that this kind of insurance has its own nature with investments and does not comply with the specified investment ratios.
According to law, the investments of insurance companies in deposits of banks should not exceed 25%. This makes Takaful companies violate investment ratios as they are not appropriate for companies working in Takaful insurance.
According to the standards of Takaful insurance, companies have to prepare two different reports. The first report states the customers’ profits and losses and the second specifies the shareholders’ profits and losses. However, the Egyptian Financial Supervisory Authority requests a consolidated report. Consequently, Takaful insurance companies issue two reports with different results.
What about the shareholders’ structure of the Egyptian Takaful Company (Life)?
Al Khaleej Insurance, Al Khaleej (Life), and Kuwait Projects Company acquired 42.5% of the capital of the Egyptian Takaful Company (Life), raising the value of their share to 60% after 5 shareholders sold their shares which are the Arab International Bank, Société Arabe Internationale de Banque, Al Baraka Islamic Bank, Cairo Company for Carton Manufacturing (COPACK) owned by Faisal Islamic Bank and Islamic Foreign Trade Company.
In addition, Faisal Islamic Bank, National Bank of Egypt, Banque Misr, Iran Development Bank and Social Fund for Development each acquire share of about 8%.
What are the reinsurance companies that the Egyptian Takaful (Life) deals with? Are they going to conclude agreements via the parent company?
The Egyptian Takaful (Life) conducts reinsurance agreements according to its own standards not with that of Al Khaleej Insurance. The company deals with many reinsurance companies such as Munich re and Gen Re.
