Insurance

Abu Dhabi: Potential growth

Although the insurance industry in Abu Dhabi has felt the effects of the global economy, downturns in regional equity markets and a slump in construction activity, it still presents opportunities for growth. Over the last six years, Abu Dhabi's insurers benefitted from the emirate's rapid economic expansion. Many rode massive waves of petrodollar investment in the state's hydrocarbon and real estate sectors, registering impressive profits. Personal insurance also grew at a healthy clip over the same period, buoyed by a mandatory health insurance law for expatriates as well as strong population growth. However, since the onset of the global economic crisis the environment has changed. The big three insurance companies all registered a drop in profits for 2008. Abu Dhabi National Insurance Company (ADNIC) reported a year-on-year drop in net profit from US$89.9 million in 2007 to US$57.2 million for 2008; Al Khanza's profit fell from US$37.6 million to US$9.3 million; and Al Ain Ahlia saw a 31 per cent drop in profit over the year, to US$39.2 million. Though these losses are significant, they are misleading when viewed in the context of the overall health of the sector. Insurers' diminishing returns are mainly due to investment portfolios being weakened by volatile international and regional bourses. Although these investments have been affected negatively by the global economic crisis, the operational side of insurance, for instance health protection, continues to be profitable.

Qatar regulator grants license to Bahrain's takaful insurer T'azur

The Qatar Financial Centre Regulatory Authority said in a statement that it has granted a license to Bahrain-based Islamic insurer T'azur Co. b.s.c. (c) to carry on regulated activities in or from the Qatar Financial Centre. Established in November 2007 with an authorized capital of US$500 million, T'azur is permitted to operate both general and family Takaful business. According to T'azur, the establishment of the company is driven by favorable economic trends in the Middle East and the growing popularity of Islamic financial products. "Very low insurance penetration belies the underlying need for risk protection and savings products for individuals, families and businesses, thus the company was established and promoted by Unicorn Investment Bank in Bahrain to target untapped opportunities and immense growth potential across the international insurance sector," said T'azur.

Bahrain: Growth at a premium

Already a force to be reckoned with, Bahrain's insurance industry looks set for a period of sustained growth in the future, having apparently seen off the worst of the international economic crisis. There are some 160 insurance companies and organizations operating in the Bahraini market, of which 25 are locally incorporated insurance firms, a further 11 being branches of foreign companies, with the rest comprising of other insurance ancillary services and insurance organizations. Currently, traditional product lines dominate the Bahraini market. Life insurance represents the largest segment of the sector, accounting for 28.3 per cent of all premiums written; followed closely by motor insurance, with a 28 per cent slice of premium sales; and fire, property and liability policies combined make up 17 per cent of the market. (source: OBG)

Saudi insurer in IPO

Saudi-based Buruj Cooperative Insurance raised up to US$14 million in an IPO this month, reports Middle East Insurance Review. General Manager Samer Kanj said: "It is a highly opportune time to launch the company because of the favorable business conditions, which include a positive economic outlook in Saudi, low current insurance penetration rates and a new insurance regulatory framework that was introduced in 2004. Buruj Cooperative Insurance Co will add value to Saudi Arabia's insurance sector as we are committed to delivering premium products that satisfy the security needs of individuals and businesses, helping them manage their everyday risks, recover from unpredicted events, and reach their goals and aspirations."

Prudential eyes Dubai Sharia funds, Indonesia license

British insurer Prudential plans to launch two Islamic equity funds in Dubai in the coming months and apply for an asset management license in Indonesia. Demand for Sharia funds would be strong once Dubai bounces back from an economic slowdown, said Mark Toh, Prudential Corp Asia's regional Islamic fund management head. "If Muslims have a choice, they would invest in (Islamic funds), previously there were none," Toh said on the sidelines of a fund launch. "There are very little of such products available not just for Malaysia, but for the global market as well." A limited product range and distribution channels have hampered growth of the Islamic fund industry. There were about 750 Islamic mutual funds with combined assets below US$50 billion as of the first quarter of 2009, a fraction of the world's mainstream asset management industry. Only 14 funds are larger than US$500 million each, according Ernst & Young, an accounting firm.