Kuwait Insurance Report Q3 2011
Includes 3 FREE quarterly updates
The insurance sector of Kuwait will continue to grow quite rapidly but this is due to the expansion of the economy and the population. By most yardsticks, the insurance sector is stagnant and it will remain so throughout the forecast period. Industry insiders are reducing their exposure to the local insurance sector. Kuwait is a good example of a country where the excitement about takaful exceeds the current reality and the potential.
The results published by the seven listed Kuwaiti insurance companies in H111 indicate that gross premiums for the entire sector rose by about 22% year-on-year (y-o-y) in 2010. Net written premiums increased by a smaller, but still respectable, 14%. Kuwait appears to be an unusual country by the standards of other Gulf Cooperation Council (GCC) members in that the growth in takaful contributions accelerated in 2009, the last year for which figures are available. As is the case in most other GCC countries, takaful accounts for about a fifth of all premiums.
However, the best single-word description for Kuwait’s insurance sector would be ‘stagnant.’ In the nonlife segment, penetration has remained unchanged for years. Unlike in other GCC countries, there is no obvious catalyst – such as the arrival of compulsory health insurance – to make this change. Life density remains minimal in a country with a generous and comprehensive social security system. None of the local insurance companies would rank as large organisations, even by the undemanding standards of the Middle East. At the time of writing, parliament has yet to pass a new law to govern the insurance sector. Anecdotal evidence suggests that bancassurance is banned (or constrained) by the Central Bank of Kuwait (CBK)’s regulatory regime. In stark contrast with its counterparts in Qatar or the UAE, for example, the Kuwaiti government is not actively promoting the development of financial services.
The corporate transactions in 2010 by Gulf Insurance, the largest local insurance company, which accounts for about half of all premiums written in Kuwait, and KIPCO, the conglomerate that is its largest investor, are telling. Gulf Insurance has been increasing its investment in its subsidiaries in other Middle Eastern countries. KIPCO sold almost half of its holding to Canada’s Fairfax Financial Holdings in September last year for KWD60mn (or US$209mn). Neither the leading insurance company nor its dominant shareholder appear to see the opportunities in the local insurance sector as being more attractive than the opportunities that are available elsewhere.
The insurance sector of Kuwait will continue to grow quite rapidly but this is due to the expansion of the economy and the population. By most yardsticks, the insurance sector is stagnant and it will remain so throughout the forecast period. Industry insiders are reducing their exposure to the local insurance sector. Kuwait is a good example of a country where the excitement about takaful exceeds the current reality and the potential.
The results published by the seven listed Kuwaiti insurance companies in H111 indicate that gross premiums for the entire sector rose by about 22% year-on-year (y-o-y) in 2010. Net written premiums increased by a smaller, but still respectable, 14%. Kuwait appears to be an unusual country by the standards of other Gulf Cooperation Council (GCC) members in that the growth in takaful contributions accelerated in 2009, the last year for which figures are available. As is the case in most other GCC countries, takaful accounts for about a fifth of all premiums.
However, the best single-word description for Kuwait’s insurance sector would be ‘stagnant.’ In the nonlife segment, penetration has remained unchanged for years. Unlike in other GCC countries, there is no obvious catalyst – such as the arrival of compulsory health insurance – to make this change. Life density remains minimal in a country with a generous and comprehensive social security system. None of the local insurance companies would rank as large organisations, even by the undemanding standards of the Middle East. At the time of writing, parliament has yet to pass a new law to govern the insurance sector. Anecdotal evidence suggests that bancassurance is banned (or constrained) by the Central Bank of Kuwait (CBK)’s regulatory regime. In stark contrast with its counterparts in Qatar or the UAE, for example, the Kuwaiti government is not actively promoting the development of financial services.
The corporate transactions in 2010 by Gulf Insurance, the largest local insurance company, which accounts for about half of all premiums written in Kuwait, and KIPCO, the conglomerate that is its largest investor, are telling. Gulf Insurance has been increasing its investment in its subsidiaries in other Middle Eastern countries. KIPCO sold almost half of its holding to Canada’s Fairfax Financial Holdings in September last year for KWD60mn (or US$209mn). Neither the leading insurance company nor its dominant shareholder appear to see the opportunities in the local insurance sector as being more attractive than the opportunities that are available elsewhere.
Contents
Executive SummaryTable: Total Premiums, 2008-2015
Key Insights And Key Risks
SWOT Analysis
Kuwait Insurance Industry SWOT
Kuwait Political SWOT
Kuwait Economic SWOT
Kuwait Business Environment SWOT
Life Sector
Middle East Life Sector Overview
Table: Middle East And Africa Life Premiums, 2008-2015 (US$mn)
Kuwait Life Sector Update
Life Insurance Industry Forecast Scenario
Table: Life Premiums, 2005-2015
Growth Drivers And Risk Management Projections
Population
Table: Insurance Sector Key Drivers – Demographics, 2008-2015
Non-Life Sector
Middle East Non-Life Sector Overview
Table: Middle East And Africa Non-Life Premiums, 2008-2015
Kuwait Non-Life Sector Update
Non-Life Insurance Industry Forecast Scenario
Table: Non-Life Premiums, 2008-2015
Growth Drivers And Risk Management Projections
Macroeconomic Outlook
Table: Kuwait Economic Activity, 2008-2015
Political Stability Outlook
Table: Middle East And Africa Defence And Security Ratings
Healthcare
Healthcare Insurance
Epidemiology
Table: Insurance Sector Key Drivers – Disability-Adjusted Life Years, 2008-2015
Motor
Table: Insurance Sector Key Drivers – Autos, 2008-2015
Islamic Finance
Insurance Risk/Reward Ratings
Table: Kuwait’s Insurance Risk/Reward Ratings
Table: Middle East And Africa Insurance Risk/Reward Ratings
Competitive Landscape
Competitive Landscape Analysis
Major Players In Kuwait’s Insurance Sector
Table: Kuwait’s Insurance Sector At A Glance
Company Profiles
Local Company Profiles
Al-Ahleia
First Takaful Insurance Company
Gulf Insurance Company
Kuwait Insurance Company
Warba Insurance Company
Regional Company Profiles
Allianz
Arab Insurance Group (ARIG)
Aviva
AXA
Chartis
Generali
HSBC Insurance
MAPFRE
MetLife ALICO
RSA
Zurich Financial Services
BMI Methodology
Insurance Risk/Reward Ratings
Table: Insurance Risk/Reward Indicators And Rationale
Table: Weighting Of Indicators 63 Skip to top