Re-insurance companies are going through difficult stages that will be encountered by innovative mechanisms.
The rise of Islamic movements on the Arab countries contributes to increase Takaful insurance activities.
“Africa Re”: $ 770 million targeted premiums during 2013… and $38 million the share of Takaful insurance
Omar Gawdat, the regional manager of the African Reinsurance Corporation “Africa Re”, revealed in an interview with “Amwal Al Ghad” that the African insurance especially as an emerging market have tremendous growth rates, enabling it to attract more investment and investors, however the political and security turmoil and the high geo-political risks are the main challenge facing reinsurance companies in this period.
He added that “Africa Re” succeeded to collect premiums from insurance companies of $ 700 million through 2012, and targeting to achieve $770 million in premium collections by the end of 2013.
What is your evaluation for the African insurance during the current period amid rising political risks?
The insurance sector is related to the political and economic life, and affected by them in boom and recession, and the African Insurance is still an emerging market and attractive for investment and investors for having high and untapped growth rates, however it is linked with the political stability, especially that the African continent has suffered from long time political turmoil as a result the rulers’ dictatorship, and the politicians view to seize development and growth of the economic situation.
The continent witnessed a recent boom on the democracy, that will contribute to the growth and development of the African economy in general, and the insurance industry in particular.
Also, South Africa is one of the countries with strong economy, which represent 40% of the insurance industry within the continent, as a result of its acquisition to powerful mechanisms and strong economy making it eligible for premium insurance industry.
How has the economic and political turmoil affected the reinsurance agreements in Africa?
The insurance industry were affected by political and economic events witnessed by African countries in the previous stage, especially with the Arab Spring revolutions, which negatively affected the reinsurance agreements, as a result of increasing the compensation and losses arising from these events, in addition to some customers’ falter in paying premiums, especially with the spread of lawlessness, making it difficult for companies to verify the causes of risk, and therefore insurance companies incurred a lot of ineligible compensation, which reflects negatively on the re-insurance, that passes through its most difficult stages in the current period.
How much compensation incurred by insurance companies as a result of the Arab Spring Revolutions?
Losses incurred by African countries during the Arab Spring revolutions vary from one country to another, in Egypt, the losses of insurance were amounted to around one billion pounds, but there are other material and moral losses, we are paying for it until now, but I hope the future will be better, previously, Insurance companies was unable to be promoted as a result of the increasing losses and damages, Now, despite passing through many turbulent events and losses, it has the ability to complete its way towards positive growth without faltering, where the insurance losses are in “convalescence” state during the current period.
What is the Egyptian market share of the “Africa re” activity?
The Egyptian insurance market share reaches about $25 million of the company’s activity volume, with a ratio of 3% of the total reinsurance activity in the company.
What is the volume of the company’s business in the African continent during 2012?
The African reinsurance company succeeded to collect an insurance premiums of $700 million in 2012, and the African insurance companies share reached about 96% of these premiums (about $600 million), while the remaining ratio is distributed on the Asian continent and the Middle East.
The company has succeeded to achieve a profit of $87 million during 2012, the company’s assets exceeded EGP 1 billion, and shareholders’ equity reached about EGP600 million by the end of December 2012.
What is the target size of the premiums collected from insurance companies during 2013?
The company aims to achieve about $770 million in premiums volume by the end of 2013, as the company is preparing and formulating a five-year plan for future activities in all its various regional offices.
Is there any intention from the company to expand on the regional and geographical basis?
The company has 10 existing regional offices who mainly responsible for Africa IPO- Management. We also have in the construction phase two regional offices in Algeria and Sudan. Our main objective is to open up to 4 new regional offices in the black continent to serve all our customers.
Is there are any intention to increase the company’s capital to regain insurance?
We’ve pumped EGP 200 million to increase the capital of the company to reach EGP 300 million. EGP 100 million was distributed in bonus shares whereas the remaining EGP 100 million has been directed towards the issuance of other shares. Our target is to increase the capital to reach 500 million pounds by the end of year 2015.
What about the African state members’ compulsory shares in the company?
Indeed, there are compulsory shares from all the African countries that we operate in, but we do not rely on them. These shares are no longer a major contributor to our business, as they do not represent more than 5% of company’s allover activities. The rest of the activities are achieved through voluntary quota and insurance companies treaties.
How many African state members are compromised in the company?
Africa Re has 40 member Countries, and still the company is keen on the presence of more African governments. The Egyptian government is represented through the General Authority for Financial Control, Misr Insurance Company, Al Mohandes Insurance Company, and Misr Life Insurance.
Are you going to register the company on the Stock Exchange?
We were studying the listing the company in the stock market specifically in Egypt, Morocco, and South Africa. However, the company preferred to refrain from this decision at the moment, due to the global economic crisis.
And what about the newly established subsidiary Africa Re-Takaful?
The $12 million Africa Re-Takaful 100% owned subsidiary by Africa Re, it has been established in response to increasing needs of African Insurance Takaful industry for specialized Regional Retakaful Operator. The Operation is from Cairo-Egypt. Africa Re-Takaful provides various Retakaful products, which were shari’a complaint products, and which are essential for Takaful companies to meet their business requirements.
What is the total volume of Africa Re-Takaful earned premiums in 2012?
Africa Re-Takaful earned a total of $ 30 million premiums is around by the end of last year, and is targeting to reach $ 38 million during this year. Africa Retakaful has been established in recognition of increasing need for Sharia’a compliance products. Africa Re-Takaful provide a complete range of Retakaful products to Takaful and Islamic companies in order to meet their business requirements. Those products are in compliance with Shari’s principles.
What are the main challenges facing Africa Re-Takaful?
The same economic and political challenges faced by commercial insurance. However, the rise of Islamists to power increased the company’s market presence. The Arab spring had a prominent role in facilitating the establishment of companies based on religious grounds.
How do you see the Egyptian-African relations and its impact on the insurance sector?
No one denies Egypt was in complete isolation from Africa since the seventies whereas the ousted regime preferred to have close ties with Europe and America. Egypt’s absence from the African arena allowed other players to penetrate it and threaten Egypt’s interests in Africa. Many attempts should be taken to restore good relations between Egypt and the African countries on similar ground basis, or return Egypt to its African roots.
What is your general perception with regard to the election of Egypt to organize 40th African Insurance Organization Conference and General Assembly?
It will have a positive impact in restoring Egypt’s regional role in the insurance industry, especially in light of the current circumstances experienced by the county.
