Global leader in insurance market set to expand in Egypt
Insurance companies in Egypt had to pay 45.5 percent more in claims in 2012-13 than the year prior due to the uprising in the country (File Archive/AFP)
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AIG, one of the world's leading property and insurance companies, is planning to expand in the Egyptian market.
In a meeting with Mohamed Moiet, deputy head of the Egyptian Financial Supervisory Authority (EFSA), Michael Whitwell, head of AIG Middle East and Africa division, said that his company was considering making AIG Egypt its Middle East regional office, Sobhy Shehata, EFSA spokesperson, told Ahram Online.
In 2012, Europe, Middle East and Africa contributed 19 percent to premiums made by AIG International, which depends mainly on the American and Asian markets.
The American insurer achieved revenues of $65.7 billion in 2012, according to its annual report.
AIG Egypt's share of the Egyptian insurance market is around 4.6 percent, with issued capital of LE60 million ($8.62 million).
The insurance sector in Egypt comprises of 30 companies, two of which are state-owned but attract around 50 percent of all premiums paid in the sector.
“The insurance sector took a blow following the 2011 uprising. Most companies made huge losses, especially car insurers,” Ahmed Nouh, head of the insurance and banking division at the Egyptian Investors Federation, told Ahram Online.
Insurance companies collected LE13 billion ($1.87 billion) in premiums in 2012/13 financial year, a rise from LE11 billion (41.58 billion) in 2011/12. However, the companies had to pay LE8 billion (41.15 billion) in claims in 2012/13 alone, while unsettled claims are around LE4.8 billion ($690 million), said Shehata.
Despite insurance premiums surpassing results in 2009/10 (LE12.7 billion/$1.82 billion), insurance companies had to pay 45.5 percent more in claims in 2012/13 than in the financial year prior to the uprising.
But insurers were able to offset the high level of claims payments by investing in government bonds. The contribution of sovereign securities increased to 76 percent, up from 72 percent a year earlier, reflecting higher yields on government borrowing.
Notably, several insurance companies are increasing their investments. Moiet was quoted on the State Information Services website as saying that investments in the sector grew 9.4 percent to LE42 billion ($6 billion) in 2012-2013 year on year.
"Any expansion by insurance companies would be welcomed as the market comprises merely 0.5 percent of GDP, which is lower than the global average for developing countries, which is 3 to 5 percent," said Shehata.
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