Egypt Insurance Report Q4 2012

Includes 3 FREE quarterly updates

Key Insights And Key Risks


The Egypt Insurance Report considers the prospects for both life and non-life insurers in the country.

Thanks, in part, to the political unrest that has swept Egypt since early 2011, the insurance sector has moved from an era of growth to one of stagnation. Prior to late 2010, the outlook had looked promising.

Life density was growing quite steadily. The substantial private insurance funds, which provide basic protection-type products – had underpinned the growth of the sector in years where demand for more sophisticated products had consolidated. Although non-life penetration had been contracting, the overall growth of the economy meant that non-life premiums rose steadily in absolute terms. By combining three state-owned insurance companies and one state-owned reinsurer under the aegis of Misr Insurance Holding Company, the government could reasonably hope to achieve meaningful synergy benefits for one of the Middle East’s largest composite insurance groups. As is not the case in most other countries in the region, there were no restrictions on foreign participation in the industry. Nor was the non-life segment characterised by cut-throat competition which had crimped profitability for most players. As of mid-2012, it appears that the insurance sector was able to absorb the substantial claims and losses arising from the civil unrest of early 2011. However, most of the other newsflow in recent months has been disappointing. The limited data that has been published suggests that, overall, growth in premiums over the last year or so has been slow. We are, however, aware of an upbeat projection from Misr Life, the life insurance operating subsidiary of Misr Insurance Holding Company, and are investigating further. There seems to have been no obvious progress towards regulatory or legislative changes that would revive bancassurance, promote health insurance or encourage the private health funds. Nor has there been any apparent progress towards removing the impediments that hinder the development of Egypt’s embryonic takaful sector.

Perhaps most crucially, the restructuring and reform of Misr Insurance Holding Company – the composite insurance group that accounts for about half of all premiums in Egypt, but which would rank in most other countries as no more than a medium-sized insurer with an interesting real estate portfolio – looks to be cautious in its scope. Unlike reform of state-owned insurers in other countries, the process has yet to deliver access to global capital or a real commitment to market disciplines. Nevertheless, as we discuss in detail in the profile of the company, we acknowledge that significant progress has been made.

Over the last quarter, BMI has made the following changes:

The analysis incorporates BMI’s latest forecasts for Egypt’s economy, including details in relation to auto sales and trends in the healthcare sector.

The analysis incorporates comments from various insurance companies, on conditions in Egypt and elsewhere, that were published in Q212.