Arab Insurance Group (ARIG) sees prospects for growth in reinsurance and personal insurance in the region in 1996 and plans to expand in Lebanon, Jordan and Morocco, ARIG’s investments general manager Bader Wahidi says.
‘There are two main areas of business which ARIG has identified as offering excellent prospects for growth in 1996. These are the existing Middle East market for reinsurance and the emerging market for medical and personal services insurance,’ Wahidi told MEED on 25 April. But he said property. marine and casualty insurance could see rates head downwards during 1996.
Bahrain-based ARIG, which is one of the region’s largest insurers, reported an 82 per cent rise in net profits in 1995 to $36.6 million. The company, which currently has total assets of $824 million, recently acquired a 49 per cent stake in Egyptian insurance firm Allied Investors Company (MEED 5:4:96).
Asked how the purchase fitted into ARIG’s regional strategy, Wahidi said: ‘We are currently pursuing opportunities in Jordan, Lebanon and Morocco and we will invest in local markets where legislation allows. The exact form of association – partnership or acquisition – will depend on countries’ applicable laws and our negotiations.’
ARIG announced in January that it plans to double its paidup capital to $300 million during 1996. ‘Our plans to increase the capital are on target. It will probably be part private placement and part public offering, targeted primarily at Middle East investors,’ Wahidi said.
The extra capital would be used to expand ARIG’s reinsurance business and finance for planned acquisitions and diversification into new areas of insurance in the Arab world.
Asked about the prospects for insurance rates during 1996, Wahidi said: ‘The encouraging trends witnessed by the insurance market from 1993 to 1995 attracted new and additional capacity, but the market is expected to remain disciplined, with the objective of underwriting for profit continuing to be the target of professional insurers.’
‘However, increasing pressure on premium rates together with the return to package policies and the introduction of policies that are longer than one year in nature in duration, are not so encouraging trends. These factors point to the likelihood of another down-cycle starting in 1996, especially for property, marine including energy and casualty classes.’