The Promising Future Of Takaful Attracts Foreign Investors
Some of the insurance companies have exited the Egyptian market and some others began to establish and acquire Takaful insurance companies in Egypt. Insurance experts said its is because the Egyptian shareholders lack awareness about the promising future of Takaful Insurance sector.
The foreign investors have the ability to do this, but Egyptians investors are in need for short-term investments such as government debt instruments.
For instance, the Tokio Marine Saudi Arabia acquired about 50% of Egypt Kuwait Holding Company’s stake in Nile Takaful Company and the Lebanese Delta Insurance Holding Company acquired Solidarity Family Takaful.
Ahmed Arfin, managing director at Egyptian Takaful (Non-life), said foreign shareholders have a clearer future outlook for the sector than that of Egyptians. The foreign shareholders have great experience in insurance, while most of the Egyptian shareholders are more experienced in banking institutions. Therefore, the Egyptians are selling their stake in these companies, because they seek fast returns and do not see that Takaful industry has a promising future. The Takaful insurance market is expected to register high growth in the upcoming period. Arfin said he did not know why the shareholders of the Egyptian Takaful (Non-life) sold their shares, while the Company achieved noticeable growth.
Mohamed El-Ghatrefy, the chairman and managing director at Red Sea Insurance Brokerage, said the only reason behind selling shares in Takaful firms is unawareness of the promising future of this sector. The Takaful insurance sector is currently growing in a noticeable way that has attracted foreign and Arab investors to the Egyptian market especially after the rise of political and economic Islam in the country. El-Ghatrefy called on Egyptian businessmen to buy shares in Egyptian Takaful firms.
El-Ghatrefy referred to some instances such as when Al-Kharafi Group dissociated from Nile Takaful General and then acquired Delta Insurance Company and that the Lebanese Delta Insurance Holding Company acquired Solidarity Family Takaful. The market is not in need for more insurance companies, but all what is needs is raising awareness about insurance, El-Ghatrefy confirmed.
El-Sayed El-Bayoumi, head of investment department at Egyptian Takaful (Non-life), said the shareholding structure of the insurance companies is mostly divided among Egyptian banks and banking institutions which seek short-term returns such as treasury bills and government bonds. However, the excessive tendency to invest in government debt instruments has made international credit rating agencies lowered the credit ratings of these banks. On the other hand, insurance companies require from five to seven years to achieve profits for shareholders.
