Political risks boosted insurance growth rate
Gaining confidence of banks’ customers after launching bancassurance is the greatest challenge facing insurance companies
Parent company is expected to achieve US$ one billion premiums in 2013 and to expand in three Arab countries
GIG Egypt achieved premiums of EGP 267 million at the end of last March and targets achieving 15% growth rate
Alaa el-Zoheiry, managing director of Arab Misr Insurance Group – GIG Egypt, stated that the recession, which has hit the Egyptian economy during the last two years due to the political turmoil and security vacuum has positively affected the insurance sector as people have become more aware of the importance of insurance in shielding themselves from the current risks which has accordingly boosted the business results of insurance companies.
He added in an interview with Amwal Al-Ghad that GIG Egypt achieved premiums of EGP 267 million in the first nine months of the current fiscal year, achieving a growth rate of 17% and seizing a market share of 5% in Egypt’s non-life insurance market.
Gulf Insurance Company, Arab Misr Insurance Group’s parent company, has expanded in the last period in Morocco, Algeria and United Arab Emirates and also made its subsidiaries unify their brand name. El-Zoheiry expected GIG to achieve premiums of more than US$ one billion by the end of this year.
How do you evaluate the current economic situation in Egypt and its effects on insurance sector?
Egypt’s economy has been hardly affected in the last two years because of the political and security disturbances that have arisen since the eruption of 2011’s revolution. This has had a positive effect on the insurance sector, as these events have raised people’s awareness of the importance of insurance in facing the potential risks amid the current turmoil. Despite the negative repercussions of security vacuum and high crime rates, insurers have succeeded in achieving good growth rates which have offset the losses.
What are the main challenges facing the insurance sector?
The insurance sector faces many challenges such as gaining the confidence of bank customers in bancassurance after being launched and facing the economic difficulties and exchange rate disturbances as the pound’s price fell 30% against the dollar which in turn created many obstacles against insurance companies in meeting their obligations when renewing reinsurance agreements.
Some companies face other challenges in collecting premiums from customers because of the current economic recession that has hit the Egyptian society. Many customers have defaulted on paying premiums regularly and companies face new legislative obstacles, such as the healthcare and social insurance law expected to be discussed in the upcoming period. These difficulties may negatively affect the volume of premiums achieved by insurance companies.
What is the most required legislation in Egypt in the current period?
The Egyptian insurance market, especially the obligatory insurance sector, requires the implementation of numerous pieces of legislation, such as increasing insurance prices, forcing insurance companies to comply with the regulatory authority’s rules to issue insurance policies in their specialties and organising the relations among insurance and healthcare management companies.
What are the sectors that the Egyptian insurers have to expand in?
Insurance companies should focus in offering personal insurance products such as personal accident insurance, family protection, travel insurance and individual medical insurance policies at low prices and marketing them with unique and modern policies to reach a large segment of customers.
What are the company’s business results for the first nine months of FY 2012/2013?
The initial signs show that the volume of the company’s assets reached EGP 543 million in the first nine months of the current fiscal year. The company’s premiums grew 17% to reach EG267 million, insurance activity surplus reached EGP 40 million, post-tax net profit reached EGP 30 million and compensation registered EGP 123 million, mainly paid for the motor insurance sector.
What is the company’s plan for the coming five years?
The Arab Misr Insurance Group – GIG works in an integrated system as it sets long-term (five-year) plans and short-term (annual) plans. The company plans to increase premiums by 10% to 15% and achieve profit rate of capital invested of not less than 20%.
Does the company plan to inaugurate new branches in the next period?
The company has recently inaugurated two new branches in Sharm el-Sheikh and Minya, as it targets achieving geographical expansion to meet customers’ needs. The company now has 14 branches and it will increase the number of its branches whenever there is an available opportunity. The company serves its customers who invest in the Arab countries through Gulf Insurance Company’s subsidiary and sister companies.
What is the company’s market share in the Egyptian insurance market?
The company has an 11% market share in the private insurance market and 5% market share in the whole insurance market including the public-sector non-life insurance companies in FY 2011/2012. We look forward to increasing its market share in the upcoming period.
What are the main insurance products recently launched by the company in Egypt?
The company has launched a number of new insurance products, such as export guarantee and agricultural products insurance policies. There are also other products which will be offered in collaboration with some banks. In addition, the company plans to increase its market share in petroleum insurance sector by benefiting from the parent company’s experience in this sector.
What is the company’s credit rating?
A.M. Best Europe – Rating Services Ltd reviewed the company’s credit rating in March and held a meeting with the company’s executive administration to discuss all the related issues of the rating process including the company’s financial results and data and its reinsurance programme. After holding internal meetings with the rating committees, A.M. Best affirmed the issuer credit rating of BBB of the Arab Misr Insurance Group, to be the sole insurance company in Egypt rated at BBB for the third consecutive year.
Why did GIG change the brand name of its subsidiaries?
Gulf Insurance Group has changed the brand name of its subsidiary companies in Kuwait, Egypt, Kingdom of Saudi Arabia, Bahrain, Jordan, United Arab Emirates, Syria and Lebanon in order to be unified. GIG will also unify the products offered to customers of GIG and its subsidiaries.
