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North Africa Insurance Report 2010
Business Monitor International, Dec 2009, Pages: 78
Business Monitor International's North Africa Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on North Africa's insurance industry.
There are a number of national insurance markets that have hardly been affected by the global financial crisis. The four that are profiled in this report – Algeria, Libya, Morocco and Tunisia – are examples. In essence, all four provide classic examples of how industries can develop rapidly if there is a move towards liberalisation, deregulation and reduction to barriers to foreign entrants. To varying degrees, large (by local standards, anyway) insurers have sought to access capital through the local stock markets. From the point of view of foreign multinationals, North Africa should represent a reasonably attractive business opportunity over the next five years or so. In terms of total premiums (ie including both the non-life and the life segments), the four countries combined are about two thirds the size of Turkey – and a multiple of Egypt which, in some ways, is more sophisticated than the insurance markets to the immediate West. The relevant figures, for both 2008 and, on the basis of the latest information available to us, 2009, are shown in the table below. As is not the case in Turkey, the foreign insurers have yet to enter the North African markets en masse. Typically there are no more than two or three foreign groups present – and they are usually focusing on particular lines of business. (Morocco, though, is an important exception in this respect). As is not the case in Egypt, the governments and regulators of the various North African countries are committed to reform and deregulation.
The combination of steady to rising prices for energy (in Algeria and Libya) and improving investor appetite for risk in the region (thanks in part to the growing importance of investors who are based in the Middle East) is germane for the medium-to-long term development of both non-life and life insurance across North Africa. Thanks in part to the activities of major foreign multinationals, life insurance is reasonably well established in Morocco and Tunisia. the publisher believes that it can – and should – grow rapidly from a low base in Libya and Algeria.
In this report, the publisher looks at the competitive landscapes of the four countries in some detail. While important differences between the four markets do exist, they are each home to surprisingly large numbers of insurance companies that, even by the standards of developing countries in the Middle East, are quite small. The implications are that: few players are realising economies of scale; the governments, local banking/financial services groups and conglomerates that have traditionally been the major shareholders in the regional insurance companies may experience a deterioration of profitability in face of increased competition; the competitive landscape is likely to change in each of the four markets. In essence, the publisher expects that local firms will disappear as a result of mergers and acquisitions, while new foreign groups will likely enter.
Islamic insurance remains something of a wildcard. In theory, North Africa should be fertile territory for Takaful operators. The four countries have a combined population of about 80mn people, and Islam is overwhelmingly the dominant religion. As is noted above, penetration and density levels are rising rapidly. In practice, pure Takaful operators appear to be absent from Morocco and Tunisia: in Libya and Algeria, they are newly established offshoots of Middle Eastern groups.
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