The Arab Misr Insurance Group Group (GIG) was ranked number two among the private sector insurance companies in Egypt and number three in the Egyptian insurance sector in the fiscal year (FY) 2016/2017, according to the Financial Regulatory Authority (FRA).
Moreover, the GIG is the only insurance company that has a sovereign rating, as it a rating of a Financial Strength Rating of B++ and an Issuer Credit Rating BBB by A.M.Best. The outlook for both ratings are stable. Due to its exceptional financial strength, the GIG’s rating from Moody’s has been upgraded to Ba3 with a stable outlook.
Daily News Egypt sat down for an interview with GIG`s managing director and chairperson of the Insurance Federation of Egypt (IFE), Alaa El-Zoheiry who said that the GIG is ranked first among private sector insurance companies in Egypt and ranked second in the Egyptian insurance market after Misr Insurance Company in FY 2017/2018.
The interview also touched upon some important issues in the Egyptian insurance industry as news spread of establishing an Egyptian reinsurance company, in addition to the new comprehensive universal health law, the transcript for which is below, lightly edited for clarity:
Can you provide latest results of GIG in FY 2017/2018 in terms of its investment portfolio, premium volumes, net profits?
The GIG achieved its insurance premiums in FY 2017/2018 worth EGP 971m. Hence, the GIG is ranked first among the private sector insurance companies in Egypt and ranked second in the Egyptian insurance market after Misr Insurance Company in FY 2017/2018.
Concerning the GIG`s total investment portfolio, the balance sheet is still under preparation, but indicators show that the total of the GIG’s investments portfolio reached EGP 890m on 30 June.
In terms of net profits, the GIG’s net profits are expected to increase by about 18%-20% compared to last FY.
Could you please tell us about major projects insured by GIG?
The major projects which are insured by the GIG include several buildings in the New Administrative Capital, in addition to sharing the insurance of the tunnels project in Ismailia.
Does GIG deal with inward reinsurance?
The GIG deals on a very small scale with inward reinsurance, as the firm in general does not prefer dealing with that type of inward reinsurance.
Can you list GIG`s main shareholders?
The Gulf Insurance Company of Kuwait is major contributor with 94.853%, the Suez Canal Bank with 5% and Egyptian businesspersons with 0.147%.
In light of great results achieved by GIG, could you please tell us more about its capital?
The GIG`s issued capital is EGP 500m, while the paid-up capital is EGP 225m.
In your opinion, what distinguishes GIG from other insurance companies?
I think what distinguishes the firm from other companies, is that the firm focuses on risk management, either for the company or for customers.
Notably, the risk management is a practice with processes, methods, and tools for managing different risks in any plant or project.
In that context, the GIG provides its clients with value-added risk management tips to access consciously what could go wrong at their facilities, determine which risks are important to deal with, and provide strategies to deal with those risks.
Moreover, the GIG has a quick way in payment claims amounts for customers.
In addition, the GIG also focuses in giving training to all its employees in the company.
Can you reveal GIG’s plans in coming period?
The GIG targets a 10% increase in premium volumes and 13% increase in net profits.
As chairperson of Insurance Federation of Egypt (IFE), could you please tell us more about Sharm El Sheikh Congress for Insurance and Reinsurance that will kick off on 28 October?
It is the first annual Insurance and Reinsurance Rendezvous, which will be held in the period from 28-30 October 2018 in Sharm El Sheikh, under the auspices of the Ministry of Public Sector Affairs, Ministry of Investment and International Cooperation, and the General Authority for Financial Supervision.
The rendezvous, aims to provide a unique opportunity for participating delegations to take advantage of the experiences from different markets in order to develop the Egyptian insurance industry.
It is expected to witness the participation of over 1,000 experts of the Insurance and Reinsurance industry, of which half of them are expected to be from the International Insurance Market.
The rendezvous will also include about 25 speakers, of which about 18 or 19 are from the International Insurance and Reinsurance markets, including companies such as Marsh, Willis Towers Watson, Hannover ReTakafu, Swiss Re, and SCOR Glob.
Finally, it will discuss four important axes, which are the best global practices in insurance and reinsurance and what’s new in the international market, what we need to develop in the brokerage business in the Egyptian insurance market, as well as discussing challenges and opportunities of the insurance and reinsurance market in Egypt.
In addition to discussing the most important challenges to meet the needs of the insurance industry’s customers, finally the role of global of block technology in the insurance sector and its consequences for the development of customer service will be discussed.
In your opinion what reasons behind beyond limited contribution of insurance in Egypt’s GDP which is 1.1%?
I think there are two reasons, first the lack of insurance awareness, second the lower incomes that become an important factor which affects negatively premium volumes in Egypt.
Can you state role of IFE in facing aforementioned problems?
We are working in facing both problems now. Concerning incomes, we are trying to offer insurance products, which are cheaper and suitable for low-income people, such as micro-insurance.
In terms of lack of awareness, the IFE holds numerous seminars and conferences to increase people’s awareness, in addition to sending awareness bulletins weekly to all the people who are interested in the insurance industry in Egypt whether they are working in the field or not.
These bulletins include in-depth information about the insurance industry, technical concepts about insurance, etc.
Moreover, the IFE will launch an awareness campaign on many television channels next September. The campaign is funded completely by the federation and it aims to spread awareness about the concept of insurance.
Which role IFE plays in facing dangers of activating universal healthcare law? What type of effect this law has on insurance portfolio for medical care?
According to the stages of the law’s activation, it will start in Port Said, taking around 10 years to take effect in Cairo and Alexandria. Of course, this law will affect the health insurance market in Egypt, but to what extent and how it will proceed, we are uncertain in the current period.
But we can expect that in the long term, the law will lead to decreasing medical care premiums, on the other hand, this law is very useful for Egyptians.
Notably, we sat down with policy makers after reading the law. We discussed with them that there must be a role for insurance companies in offering this service.
Then executive regulations came out including a role of the insurance market within the law.
The role itself is still not clear until now, but we are holding meetings with representatives of the Ministries of Health and Finance, to better learn and understand our role.
Notably, health insurance is obligatory, whereby people will pay to the Social Insurance Authority the value of health insurance. The client who has health insurance with an insurance company and pays to the Social Insurance Authority, will be able to get better rates from the insurance company and the insurance company will be compensated for the amounts of their claims, but subject to the prices of the health insurance scheme.
Having said that, we are not yet clear if this will be the case or it will be handled otherwise.
We heard news that IFE thinking of establishing an Egyptian reinsurance company. In your opinion, what type of challenges impede its establishment?
I think there are three main challenges. First of all, the capital, as it should not be less than $200m or $250m, which is a huge capital, hence you will need the entry of investors and banks to invest in the capital.
Notably, the break-even of the reinsurance is around five or seven years, therefore no one will invest in it unless he understands and prefers the reinsurance, as most banks and investors will prefer other types of investments which breakeven faster.
The second challenge relates to the credit rating of Egypt, as it should not be less than A-.
Meanwhile, there are some international insurance companies which have rules, stating not to deal in the reinsurance with a low credit ratings. Hence there will be limitations in the company’s work.
Finally, the last challenge, is the lack of trained, qualified employees who can understand well pure reinsurance, and in that situation we have two options: the first, is to appoint employees from outside Egypt, which is costly, and the second is to train employees in Egypt on pure reinsurance, which will take a lot of time.
Having said that, it is very important to mention that the IFE will continue to support the idea of establishing a reinsurance company for Egypt.
As one of pioneers of insurance industry, what hopes do you have for it?
First of all, I hope to see more expansion and growth in the Egyptian insurance market.
Second, I hope to find more awareness about insurance and more progress in the industry itself.
Currently we are working on micro-insurance, however the premium volumes are still not keeping pace with the number of people in Egypt, whereby we hope to see an increase in the premiums volumes.
Do you expect to increase insurance portfolio in Egyptian market, with increasing development projects in Egypt?
Of course, anything new in the state whether a new project, foreign investment or local investment, affects the insurance company positively. In all cases of the new project when it is completed or under construction, the insurance market benefits.
Finally, what are IFE`s plan in coming period?
We put a four-year-plan, which focuses on developing the industry and peoples’ skills.
In addition, we aim to increase premium volumes, and raising insurance awareness, as well as holding several seminars and conferences.
TheIFE in cooperation with the FRA targets to double the premium volumes in the Egyptian insurance market within a period of three years. Moreover, the IFE seeks with the FRA to find compulsory insurance products which suit peoples’ needs, such as premiums of professional mistakes.