North Africa Insurance Report 2008 |  | Author: Business Monitor International
Publisher: MarketResearch.com
Category: Book
Buy New: $530.00
as of 8/1/2010 04:23 CDT details
Seller: Amazon.com
Format: Download: PDF
Media: Digital
Pages: 53
ASIN: B0032IYVCU
Publication Date: February 15, 2008
Availability: Available for download now
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| Editorial Reviews:
Product Description
In the trade and mass media, most reviews of the insurance sectors of the Middle East and North Africahighlight the potential for growth of markets that are, at present, underdeveloped. The drivers of growthare easy to identify: the opportunities that come with a boom in energy prices; the opening of markets thatwere once dominated by state-owned (near-) monopolies to competition; the admission of foreign insurersin accordance with World Trade Organization (WTO) obligations; growing understanding of theadvantages of insurance (and, in particular, life insurance - given the traditional cultural aversion to it inmany Islamic countries); legislative changes to promote (compulsory) medical insurance in manycountries and so on.
Morroco
To differing extents, all these facets are present in the four markets (Morocco, Algeria, Tunisia andLibya) in this report. Morocco has gone the furthest in terms of liberalisation and deregulation: quiteunlike the other three countries (or Egypt or Saudi Arabia) there is no (overwhelmingly) dominant stateownedinsurance company. After a bewildering series of mergers over the last few years, much of themarket is now in the hands of five private sector groups. Two of these are controlled by large Frenchmultinationals - AXA and Société Générale. However, the other three, including RMA Watanya - thelargest insurance company in North Africa (outside Egypt) is owned by Moroccan interests.
The table below shows BMI’s estimates of the current sizes of the non-life and life segments of the fourcountries, and compares them with our estimates of the current sizes of the corresponding segments ofthree other countries - Saudi Arabia, Egypt and the United Arab Emirates (UAE). The table highlights theimportance of Morocco in a regional context. In spite of being a (much) poorer country than Saudi Arabiaor the UAE, it has already emerged as one of the key markets in the region. Indeed, it is often - andaccurately - described as being the largest insurance market in Africa after South Africa.
What is not said is that Morocco has achieved this status because the insurance sector has already becomequite sophisticated relative to the overall size and wealth of the economy. To a much greater extent thanin the other countries of the region, bancassurance (i.e. the distribution of long-term savings products viabanks) is well established in Morocco. Morocco’s life segment is the largest in the region, and dwarfs itscounterparts in the other three countries that are profiled in this report. The implication of all this is thatthe growth of premiums in Morocco - and especially in the non-life segment - is likely to be respectablerather than spectacular through 2007-2012.
Tunisia
Although wealthier than Morocco in terms of GDP per capita, Tunisia has not gone nearly as far in termsof privatisation and liberalisation. The state owned (non-life) insurer STAR is still by far the largestplayer overall. Generali, through its ownership of Maghrebia, is the main foreign group that is active inthe country. The remaining companies are typically owned by Tunisian business/financial interests,mutuals or small and specialised insurers. Life insurance appears to be growing very quickly from anextremely low base.
Algeria
Some 12 years after the original opening to competition of the insurance sector of Algeria, the four mainstate-owned firms - CAAR, CAAT, SAA and CNMA - still speak for around two-thirds of the market.Various French majors have expressed some interest in taking advantage of the opening of the market toforeign insurers. However, to date, only Cardif has actually established an operation in Algeria. Lifeinsurance is even less well developed than it is in Tunisia: however, what few figures are available fromthe Conseil National des Assurances (CNA - the trade association) suggest that, in Algeria too, lifeinsurance has been growing explosively.
Libya
Long the object of international trade embargoes, Libya is the latest North African country to deregulateits insurance sector. Life insurance hardly exists at all. Libya Insurance Company - the state-ownedformer monopoly - still accounts for about 40% of the market. The other insurers are all owned by, orhave very strong commercial links to, state-owned enterprises. Libyan law still requires that locals hold amajority of the shareholding of Libyan insurers. Nevertheless, Libya is moving in the same direction asthe other three countries.
Most of the changes that are taking place in the insurance sectors of the four countries are positive.However, our optimism in terms of the overall prospects for insurance - reflected in our newly developedInsuranceBusiness Environment Rating (IBER) is constrained by three factors. The first is that none ofthese markets are large in absolute terms. Even if - as is likely the case for the life segment in all fourcountries - the rate of growth is extremely rapid, the absolute level of growth is unlikely to be large. Asnoted above, the current level of development achieved by the non-life segment in Morocco is such that itwill likely grow less rapidly than its counterparts in other countries in the region. The second factor isthat, outside Morocco, it would not be fair to say that the overall environment is vibrant and competitive;state-owned companies (particularly in Algeria and Libya) continue to dominate.
The final problem pertains to the insurers rather than the markets. By the standards of anything other thantheir own countries, all of the insurers in the four countries - whether in the non-life segment, lifesegment or both - are small operations. A small number can benefit from being local representatives ofgigantic French (or Italian) financial institutions. However, the vast majority would be completely unableto gain economies of scale.
Quite how the competitive landscapes change in the four countries remain to be seen. There has beensome press comment speculating about the possible entry of foreign (and particularly US) majors toMorocco. At this stage, our view would be that the competitive landscape is unlikely to change much,unless one of the five largest players wants to sell their business in Morocco: over the last year or so, eachof them has been buying new, or building existing, operations. (The only partial exception to this is ONA,which sold its half share of AXA Assurance Maroc to AXA: it appears that ONA wanted to focus onWafa Assurance, another one of the major insurers - and the leader in the life segment - that it owns).Tunisia appears to be a market that is ripe for consolidation (in the way that Morocco was five years ago).
It is possible that a foreign company feels motivated to enter as a part of the process. By contrast, changein Algeria and (especially) Libya will depend on government decisions to privatise assets.As a final comment, we would note that there no sign that Takaful (Islamic insurance) operators haveanything more than a minute share in any of the four countries.
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