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Recently released market study: Egypt Insurance Report Q2 2011

Recently published research from Business Monitor International, "Egypt Insurance Report Q2 2011", is now available at Fast Market Research

 
PRLog - Apr. 15, 2011 - Key Insights On Egypt's Insurance Sector

Egypt is undergoing a dramatic political shift after unprecedented demonstrations pushed Hosni Mubarak out of office in February 2011. As such, the political economic and business outlook for Egypt is uncertain. BMI forecasts that in the coming quarters Egypt will include marked changes to trade, investment and consumption patterns, and therefore we have downgraded forecasts to FY10/11 real GDP growth of 3.2% (from 5.1% previously).

The resignation of former Mubarak on February 11 has gone a long way towards improving Egypt's short-term political risk profile, particularly as the decrease in large demonstrations and violence allows the country to regain a sense of normality and economic activity is able to slowly resume. However, Egypt's political crisis is still going, with a questions about the power of different political groups, the role of the military in a new government and how domestic economic policy may change in the future all yet to be answered.

The insurance sector in Egypt will be affected by the slower economic growth and a possible pause in the positive trends in the sector that had been taking place. These included opening up to foreign competition and a trend towards financial liberalisation and governance. Weaknesses in Egypt's underlying business environment (namely elevated corruption, uncertainty over property rights and a rigid labour market) are unlikely to be addressed in 2011 as the military government focuses on preparing the country for parliamentary and presidential elections. We expect reform momentum to be a victim of the political unrest and we stress that there is no certainty that any future government will be more business-friendly or open to foreign investment

The insurance market is dominated by the Insurance Holding Company (IHC). This is the state-owned enterprise through which the government maintains its stakes in Misr Insurance and the National Insurance Company of Egypt (NICE). Misr Insurance includes the operations of the eponymous insurance firm, al-Chark Insurance and Egyptian Reinsurance, which were merged in 2007. Misr Insurance is a composite insurer, although IHC has been separating its life operations from its non-life operations in preparation for an initial public offering of the life business. NICE, which operates separately from Misr Insurance, focuses on health, pensions and other life products.

We continue to provide a breakdown of the insurance sector by line from the point of view of the regulator in this report. In Egypt, group life products account for about a quarter of overall life premiums. In the non-life segment, comprehensive motor insurance (presumably compulsory third-party motor liability, CTPML) is the largest line, accounting for about a fifth of gross written premiums. Other major lines, accounting for over a tenth of non-life premiums each, include oil, fire, other motor insurance and accident insurance.

At the time of writing, we have been able to ensure that the report includes actual data for the year to June 30 2009. Our numbers up to June 30 2010 take into account predictions made by the regulator in relation to the likely development of Egypt's insurance sector over the course of the year. We estimate total premiums in the 12 months to the end of June 2010 of EGP12,393mn. This includes non-life premiums of EGP5,148mn and life premiums of EGP7,245mn. In the year to June 30 2015, the corresponding figures are forecast to be EGP25,156mn, EGP12,101mn and EGP13,055mn. In terms of the key drivers that underpin our forecasts, we expect non-life penetration to rise from 0.41% of GDP to 0.61% and for life penetration to grow from US$16.5 per capita to US$33 per capita over the same period. BMI's proprietary Insurance Business Environment Rating for Egypt is 47.0.

Issues To Watch

Privatisation Of Misr Insurance's Life Operations Through IPO

The process would likely add to the overall transparency of Egypt's insurance sector whether or not a deal actually takes place. The latest official indications are that the non-life operations of Misr Insurance and NICE are unlikely to be privatised any time soon.

Foreign Groups In Egypt

Multinationals in Egypt include MetLife ALICO, Allianz and ACE. Credit Agricole and Malaysia's Etiqa have applied for licences. Given that Egypt appears set to achieve steady, double-digit growth in premiums over the next five years and is home to non-life and life segments that have moved beyond embryonic levels of development, it is possible that more companies will look to enter the market. However, the uncertain political environment may delay this process.

Islamic Finance

Egypt's regulators and financial institutions have been less active in promoting Islamic banking and takaful than their counterparts in Bahrain and Malaysia. Nevertheless, takaful may play a significantly greater part in the overall development of Egypt's insurance sector than it has done so far.

For more information or to purchase this report, go to:
-  http://www.fastmr.com/prod/130668_egypt_insurance_report_...

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets.  BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports.  Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports.  View more research from Business Monitor International at http://www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

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