Travelling a new road

As mature markets remain relatively flat, re/insurers have begun to look elsewhere for growth. With Middle East and North Africa (MENA) insurance markets generating more than $44 billion of premiums in 2013, according to the Qatar Financial Centre Authority (QFC Authority), the region appears to be a smart choice.

The second annual MENA Insurance Barometer, published by the QFC Authority, added that confidence in the future of the MENA insurance markets strengthened in 2013. More than three quarters (76 percent) of executives polled expect regional premium to outgrow gross domestic product (GDP), up from 68 percent the year before.

This all contributes to a combined GDP of $3.6 trillion, with low insurance penetration seen as a great opportunity. For the wider MENA region, the average share of premiums in regional GDP is about 1.3 percent, compared with 6.5 percent for the world as a whole.

The survey added that the prospect of major infrastructure and construction projects is attracting a number of re/insurers. There are a number of exciting projects associated with Expo 2020, which is being hosted by Dubai, and Qatar’s hosting of the football World Cup 2022.

According to data from Allianz Global Corporate and Specialty, in 2014 the 100th super-tall building—more than 300 metres high—was built. Most of these buildings are located in Asia and the Middle East, which account for 90 percent of recent super-tall projects. Allianz is acting as the re/insurer of the planned Kingdom Tower in Jeddah, which at 1,000 metres will have doubled the height of the world’s tallest building in 10 years. The building has an insured value of $1.5 billion.

“Within the MENA markets, the vast majority of high value commercial risks such as energy and infrastructure are ceded to the international reinsurance market, with primary insurers either fronting these risks or retaining very little,” explains AM Best in a report.

"The MENA region is no exception to the growing trend of companies trying to be geographically close to their clients."

The Liberty syndicates at Lloyd’s are leading the reinsurance programme on the largest insurance programme on infrastructure in Qatar and one of the largest risk covers related to railways ever placed in the world. The project, by Qatar Rail, has been awarded to a six-member consortium of insurers led by Qatar Insurance Company. The rail company is overseeing the construction of the country’s integrated railway network. The 231km Doha Metro will form an integral part of Qatar’s overall railway network.

Additionally, MENA is playing an increasingly important role in energy production. Competition in this area is growing, but there are concerns that this could actually drive energy capacity out of the market as it becomes unprofitable to write. But this has not stopped a number of re/insurers, such as ACE, strengthening their energy expertise in the region.

Re/insurers are not boosting their expertise just in construction and energy. The MENA region is no exception to the growing trend of companies trying to be geographically close to their clients. Although a number of re/insurers have exited the region, many more are surging in to the market.

Another lure is the perceived low catastrophe exposure, which is rated by the QFC Authority Barometer report as the second most frequently mentioned strength. Low cat exposure, particularly in the Gulf region, the Levant and Egypt, leads to “comparatively low and stable loss ratios”, according to the report, making the region incredibly attractive.

Boosting this attraction is the introduction of financial centres alongside strongly regulated offshore centres which have helped open the market.

“This has been the case in particular for reinsurers and brokers, with most major reinsurance institutions having some form of regional presence. AM Best has seen an influx of Lloyd’s syndicates establishing a regional presence in 2013 and 2014, including Catlin and Talbot,” says AM Best.

Branching out

In November 2014, Lloyd’s appointed Mark Cooper as the market’s first country manager for Dubai to head up its new office in the Dubai International Financial Centre (DIFC). He joins Lloyd’s from the DIFC Authority (DIFCA), where he held the position of sector head—insurance, reinsurance & captives.

“Lloyd’s has responded to demand from managing agents to establish a presence in Dubai as part of Vision 2025. Mark’s extensive experience in the Middle East and strong knowledge of the Lloyd’s market make him the ideal person to lead our Dubai operations and I am very pleased he will be joining us,” says Vincent Vandendael, Lloyd’s director, international markets.

Lloyd’s has not been the only one to see the great potential on offer: throughout the year, Beazley, Catlin, Cooper Gay, Markel and XL made similar announcements.

Catlin Middle East, also situated in the DIFC, is set to offer facultative reinsurance to insurers in the Gulf Cooperation Council (GCC) countries, Africa and parts of South Asia. The launch followed Catlin Middle East being granted a category 4 licence by the Dubai Financial Services Authority (DFSA) to operate as a Lloyd’s coverholder in May 2014.

It will underwrite on behalf of Catlin Syndicate 2003, the largest in the Lloyd’s market in terms of premium volume. Dalip Verma, who has 37 years of experience in the general insurance business, will lead the operation.

Mark Newman, CEO of Catlin Asia-Pacific, says: “The establishment of Catlin Middle East parallels Catlin’s diversification strategy to build a distinctive and efficient international structure. Our expanded geographical footprint enables us to better take advantage of opportunities, increase awareness of the Catlin brand and work more closely with brokers and their clients.”

In December 2014, Beazley opened an office in the DIFC to underwrite political risk, trade credit, terrorism, political violence, and contingency insurance. The office will be led by Crispin Hodges, who joined Beazley in 2008. Beazley Middle East has authority to enter into contracts of insurance on behalf of Beazley Syndicates 623 and 2623 at Lloyd’s which will reinsure local ceding insurers.

“The Middle East possesses tremendous potential. Not only is it a region of healthy economic growth but much of this growth tends to be re-invested domestically—which in turn is driving increasing demand for insurance in the region,” says Adrian Lewers, Beazley’s global head of political risks and contingency.

“Having a presence on the ground will allow us to target markets across both the Middle East and North Africa, and deliver locally the highly specialised underwriting for which we are known in London. This is an extension of the strategy which has seen Beazley establish specialist underwriting hubs in Singapore, Australia and Hong Kong.”

Broker Cooper Gay Swett & Crawford (CGSC) launched a division covering MENA, which represents CGSC’s first foray into the region, with further expansion planned for the future. Cooper Gay (Dubai), a wholly owned subsidiary of Cooper Gay Holdings, will be based in the DIFC.

“The insurance industry in the MENA region is undergoing significant transformation and has demonstrated impressive growth in recent years."

The company will handle all classes of business in conjunction with the group’s wholesale operations in London, Asia and around the globe, will structure treaty and facultative solutions for regional and multinational insurance companies. It will also work with third party brokers across the MENA region.

In Su (Andy) Chang has been appointed senior executive officer. Chang joined Cooper Gay Asia in September 2013 to develop the company’s business in Singapore and identify opportunities across the MENA region.

“The insurance industry in the MENA region is undergoing significant transformation and has demonstrated impressive growth in recent years. We believe that there is tremendous potential for CGSC, particularly following Lloyd’s plans, announced earlier this year, to open a representative office in the emirate,” says Toby Esser, CGSC group CEO.

In April, XL opened a Dubai reinsurance office to support its continued expansion in the region. David Watson, CEO of XL Re Europe, says that the opening of a reinsurance office in Dubai was a natural step for the group.

Mohamad Alali was appointed as senior executive officer and Imen Hamadouche as a property facultative underwriter, both based in the new office. Alali joined XL Group from Willis in Dubai having previously worked in London as an international property broker from 2006.

“There remains a strong reinsurance purchasing culture among local cedants with large property, industrial and energy exposures in the MENA region as well as growing opportunities in the casualty and specialty sectors.

“What these clients want is a local presence and knowledge supported by global expertise and security, and that is exactly what we plan to deliver,” says Watson.

Waiting on a licence from the DFSA is specialist insurer Markel International. Markel’s business will be located within the Lloyd’s offices in the DIFC and will initially focus on offering trade credit covers, with Leroy Almeida heading up the office. Almeida has worked as senior business development manager with Atradius’ cooperation partners in the UAE since 2005.

“There has been an increasing amount of business opportunity through the Middle East for our trade credit insurance product which we launched in London in 2010. We have since introduced the product in Singapore, Munich and New York but the Middle East has been a missing part of the jigsaw,” says Ewa Rose, managing director of Markel’s trade credit division.

Africa’s largest private reinsurer outside of South Africa, Continental Reinsurance, has also stepped into the region with the opening of a regional office in Tunis and introduction of a Sharia-compliant Takaful offering.

“Our strategically positioned local office in Tunis is a central location, which greatly helps extend our reach into the Maghreb and North African markets. Being close to our clients allows us to improve our insight into local markets, better understand their needs and local risk requirements, and deliver locally relevant offerings,” says Femi Oyetunji, group managing director and chief executive officer of Continental Re.

According to Continental Re, the exponential growth of Takaful has led to increasing demand for Retakaful capacity, particularly in the region of North Africa which has a majority Islamic population in the range of 95 percent to 99 percent.

Boosting expertise

Re/insurers already operating in the region are not standing still; many have boosted their expertise with appointments.

Strengthening its expertise in the construction line, Willis has appointed Keith Chapman as regional construction industry leader for the Middle East. Based in Dubai, Chapman’s primary responsibility will be to develop risk management solutions for construction companies in the region.

“Many of the Middle East economies are showing very positive growth dynamics, which is supported by both public and private sector investment in continued infrastructure expansion. Exciting projects associated with Dubai hosting the Expo 2020, Qatar due to host the football World Cup in 2022 and recent announcements around the Saudi rail expansion also bode well for the construction industry in the region,” says Bill Creedon, global head of construction for Willis.

Its reinsurance division, Willis Re, appointed Robert Wildbore as regional director of its Indian Sub-Continent, Middle East, Africa and Turkey (APMETA West) operations. He is based in London and will work closely with Willis Re’s local treaty reinsurance teams across the APMETA West region. The operations are part of the wider Willis Re APMETA team led by managing director, Maurice Williams, in London.

In its energy line, ACE appointed Adam Groves, formerly of Marsh, to the role of energy underwriter for ACE in the MENA region. Based in Dubai, Groves will be responsible for further expanding ACE’s energy portfolio across MENA and for contributing to its future profitable development.

RFIB, the international Lloyd’s insurance and reinsurance broker, has appointed Hassan El Kaissi as general manager of RFIB Saudi Arabia, based in its Riyadh office. He joined from Zurich Insurance, where he served as head of its mid-market segment in the Middle East representing a number of its branches throughout the region. Also at RFIB, Martin Pyrke was appointed deputy senior executive officer, Middle East, based in RFIB’s Dubai office.

“The Middle East is a central part of our growth strategy and Hassan is the ideal candidate to spearhead the development and expansion of our Riyadh office,” says Jonathan Turnbull, CEO of RFIB.

Broker Lockton appointed Mark Randall as a senior vice president, based in the Dubai International Finance Centre and focused on growing Lockton’s MENA operations.

Meanwhile, Moscow-based Malakut Insurance Brokers appointed Alexander Dolgopolov as CEO of Malakut Insurance Brokers (UAE). He began his career in the Moscow office of Malakut in 2008 as a broker in the marine and energy insurance division. In 2010 he joined the international business development division and in 2013 was appointed director of the unit.