The next phase of growth

This section explores the latest trends in the rapidly burgeoning global takaful (shari’a-compliant insurance) market which is estimated to eventually grow to between US$7bn (Swiss Re estimate) and US$15bn (Takaful Re estimate) by 2015.

Salama Eyes Further UAE Growth

Salama Islamic Arab Insurance has opened two new branches in the UAE as part of a “major” Middle East expansion drive, the company revealed on Tuesday. The Islamic insurance provider said demand for Takaful products had prompted an increase in branches across the emirates from four to six. Dr Saleh Malaikah, vice chairman and CEO of Salama, confirmed that a further two would be added before year-end.

GCC Growth Hampered By Low Populations

Low population numbers in GCC countries is restricting the scale of growth throughout the region’s insurance markets, an A.M Best Co report has claimed. The credit rating agency also said “fierce” competition among local insurers was hampering growth in some segments. “Foreign insurers and reinsurers are aware of the opportunities the GCC offers in comparison with the West’s stagnant insurance markets. However, competition, particularly among local insurers, remains one of the biggest challenges to companies operating within the GCC,” said Yvette Essen, head of market analysis for A.M. Best’s global financial services division.

UAE Records Biggest Three-Year Takaful Rise

The UAE and India were the biggest growth markets for Islamic insurance during a three-year period, an Ernst & Young report has revealed. A 135 per cent compound annual growth rate for takaful was registered across the emirates and India between 2005 and 2008 – 100 per cent more than the 35 per cent increase experienced in Indonesia. Meanwhile, the Gulf recorded 45 per cent growth during the same period. According to the report, takaful contributions will exceed $8.9bn this year compared to $5.3bn in 2008.

Promoting Growth And Competitiveness

With insurance market growth of 26 per cent between 2005 and 2008, the region’s insurance sector has made significant progress, but it still has room for improvement, according to Peter Vayanos & Roger Kastoun of Booz & Company.

AXA Profits Buck Economic Downturn

AXA has revealed a Middle East profit surge for 2009, despite operating in tough economic conditions throughout the year. The company registered a $40 million net income after generating $445 million from gross written premiums, an 8.6% rise compared with 2008. All AXA operations across the GCC reported double-digit growth ranging between 15% and 26%, apart from the UAE, which suffered a slight drop. While business in Abu Dhabi was up 26%, Dubai registered an undisclosed decline. Jean-Louis Laurent Josi, CEO AXA Insurance Gulf and Middle East, attributed the company’s growth to employee and customer satisfaction, market support and a resilient business model.

Mega Projects Spur Mideast Insurance Growth

Huge investment in mega projects throughout the Middle East has spurred growing demand for insurance policies, a leading financial expert has claimed. While addressing delegates at the inaugural World Space Risk Forum in Dubai on Tuesday, Ahmed Humaid Al Tayer, Governor of the Dubai International Financial Centre, said: “The region’s huge programme of infrastructure spending on energy, water, transportation and petrochemicals is creating mega projects that require insurance and reinsurance services.”

The State Of Kuwait

Government projects have fuelled growth for local insurers, but the Kuwati government will look to build on this in 2010.

Al Ittihad Gets B+

AM Best Co has assigned a financial strength rating of B+ (Good) and an issuer credit rating of “bbb-” to Al Ittihad Al Watani (L’Union Nationale) Societe Generale d’Assurances du Proche Orient sal (Al Ittihad) (Lebanon). The ratings of Al Ittihad reflect its improving capital position, robust underwriting performance and good business profile. Offsetting factors include its weak investment strategy and underdeveloped risk management framework.

Accelerated Evolution

Policy spoke to Walid Sidani, CEO of Abu Dhabi National Insurance Company (Adnic), about the company’s ambitious plans for the future.