(Photo Public Domain)
By: Lamia Nabil
The insurance market has achieved high growth rates despite the diminished economic activity and political instability which Egypt is currently experiencing, concluded a recent report by the Egyptian Financial Supervisory Authority (EFSA).
“The Egyptian insurance market has continued to provide protection from the dangers that may be exposed to property or persons as well achieving high growth rates in both levels of total premiums volumes or claims volumes,” the report concluded.
Total paid claims jumped to EGP 7.789bn for financial year (FY) 2011-2012 compared to EGP 5.866bn during FY 2012-2011.
Government insurance companies accounted for 60.3% of total market compensations, with private insurance companies accounting for 39.7%.
Insurance expert Sami Naguib called the report “very optimistic” as, he explained, insurance companies “faced great problems during the last two years as claims became linked with the increased instability in the country, with premiums jumping especially after the unrest.
“The claims increases were due to new problems and dangers which insurance companies had to cover such riots, unrest, armed robbery, and violence and vandalism,” he said. “In many cases, reinsurance companies actually refused to reinsure these risks, which were considered another obstacle the insurance companies had to get over.”
“The ability of insurance companies to pay claims fell as they now either pay part of the claims postponed payment altogether,” he continued.
According to the report, total investments in the government insurance sector jumped 9.4% to EGP 38.684bn for FY 2011-2012 compared to EGP 35.348bn for FY 2010-2012,
Net income from investments in the government sector jumped by 22.1% to EGP 3.350m for FY 2011-2012, compared to EGP 2.742m for FY 2010-2012, indicating an increase not only in the amount of investment but also in revenues generated as a result.
Total policyholders’ rights rose for the government sector 9.1% to EGP 30.444bn for FY 2011-2012 compared to EGP 27.894bn for the FY 2010-2011.
Total shareholders’ equity rose by 15.4% to EGP 7.860bn for FY 2011-2012 compared to EGP 6.831bn during FY 2010-2011
Private sector insurance funds’ total contribution to the market rose 8.3% to EGP 4.167bn for FY 2011-2012, compared with EGP 3.847bn during FY 2010-2011.
Total insurance benefits paid to contributors to private insurance funds rose by 2.9% EGP 8.799bn for FY 2011-2012, compared with EGP 3.507bn for 2010-2011.
Total investment volumes in the private sector rose 9.2% to EGP 32.341bn for FY 2011-2012 compared with EGP 29.625bn for 2010-2011.
The total volume of net income from investments in the private insurance market rose by 5% to EGP 57 million for FY 2011-2012 compared to EGP 2.793bn for FY 2010-2011.
The total volume of reserve money for private insurance funds rose 6.8% to EGP 32.411bn for FY 2011-2012 compared with EGP 30.349bn for FY 2010-2011.
Finally, the report explained the activity of brokerage and reinsurance companies as total assets volume increased to EGP 64m in December 2011 compared with EGP 37m year-on-year, a jump of 73%.
Brokerage companies which were established using Egyptian capital accounted for 61% of total assets in December 2011, while those established using foreign capital accounted for 22%.
Venture capital brokerage companies, both Egyptian and foreign, reached 17%.
Total shareholders’ equity rose in December 2011 to EGP 27m, compared with EGP 16m in the same time in the previous year, a rise of 69%.
Total net profit raised in December 2011 jumped 33% to EGP 8m, compared with EGP 6m year-on-year.
