Egypt’s Minister of Investment, Mahmoud
Mohieldin, has announced the approval of a plan to merge all
state-owned insurers as a prelude to their probable, long-promised
privatisation.
Three insurance companies are involved: Al Chark
Insurance, National Insurance Company of Egypt and Misr Insurance.
According to the Egypt Insurance Supervisory Authority (EISA), they
have a combined share of 69 percent of Egypt’s life and general
insurance market measured in terms of the industry’s total
investment assets as at 30 June 2006 of EGP18.7 billion ($3.3
billion).
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The fourth state-owned entity that will form part of the merger is
The Egyptian Reinsurance Company, Egypt’s only reinsurance
organisation.
The first phase of the merger would last for six months and
Mohieldin said details of the second phase would be announced in
March 2008 and may include a public offering on the Cairo stock
exchange. He explained that the merger decision was taken after a
two-year study that included input from, among others, BNP Paribas
Bank, Commercial International Bank and consultancy Milliman.
Egypt’s insurance industry has experienced solid growth in recent
years and according to reinsurer Swiss Re recorded total premium
income of $843 million in 2006, a 10.9 percent increase compared
with 2005. Life insurance premiums totalled $356 million, an 18.7
percent increase compared with 2005 and more than double the $162
million recorded in 2002.
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By GlobalDataMarket penetration remains low and, according to Sigma Swiss Re, in
2006 life insurance premiums represented only 0.3 percent of
Egypt’s GDP while premiums averaged $4.70 per capita. According to
the EISA, 758,000 life insurance policies were in force as at 30
June while new policy sales during the 12 months preceding that
date totalled 146,000.
Egypt has a population of 80.3 million and a GDP per capita of
$4,200 (2006), according to the US Central Intelligence
Agency.
The Egyptian government has been encouraging participation by
foreign insurers, a process that has been assisted by the removal
of a 49 percent cap on foreign holdings in insurers in 1998.
According to the EISA, there are five private sector life insurance
companies in Egypt, all of which are foreign-owned or have strong
foreign backing. They are:
• Ace Life Insurance, in which Bermuda-based Ace Group holds a 51
percent stake and Egyptian investment company Commercial
International Investment the balance;
• Allianz Life Assurance of Egypt, an 80 percent-owned unit of
Allianz, was established in 1976 when it became the first private
joint venture insurer in Egypt;
• Commercial International Life Insurance, in which Egyptian bank
Commercial International Bank and UK insurer Legal & General
each hold a 40 percent stake;
• Pharaonic American Life Insurance, a 90 percent-owned unit of
American International Group; and
• NSGB Life Insurance, in which French banking group Société
Générale’s insurance unit, Sogecap, holds a 75 percent stake and
its Egyptian banking unit, National Société Générale Bank, the
balance.
In total, there are now 15 private-sector insurers in Egypt: the
five life insurers, six general insurers, three composite insurers
and one health insurer, which is BUPA Egypt Insurance, a unit of UK
insurer BUPA.
