SCZONE showcases investment opportunities to eight Japanese companies    Egypt urges Israel to accept Gaza deal amid intensifying fighting    Egypt, ADIB explore strategic partnership in digital healthcare, investment    SCZONE, Tokyo Metropolitan Government sign MoU on green hydrogen cooperation    Al-Sisi, Macron reaffirm strategic partnership, coordinate on Gaza crisis    Egypt welcomes international efforts for peace in Ukraine    Contact Reports Strong 1H-2025 on Financing, Insurance Gains    Egypt, India's BDR Group in talks to establish biologics, cancer drug facility    AUC graduates first cohort of film industry business certificate    Egypt to tighten waste rules, cut rice straw fees to curb pollution    Indian tourist arrivals to Egypt jump 18.8% in H1-2025: ministry data    Egyptian pound down vs. US dollar at Monday's close – CBE    Egypt's FM, Palestinian PM visit Rafah crossing to review Gaza aid    Egypt prepares unified stance ahead of COP30 in Brazil    Egypt recovers collection of ancient artefacts from Netherlands    Egypt harvests 315,000 cubic metres of rainwater in Sinai as part of flash flood protection measures    Egypt, Namibia explore closer pharmaceutical cooperation    Fitch Ratings: ASEAN Islamic finance set to surpass $1t by 2026-end    Renowned Egyptian novelist Sonallah Ibrahim dies at 88    Egyptian, Ugandan Presidents open business forum to boost trade    Al-Sisi says any party thinking Egypt will neglect water rights is 'completely mistaken'    Egypt's Sisi warns against unilateral Nile measures, reaffirms Egypt's water security stance    Egypt's Sisi, Uganda's Museveni discuss boosting ties    Egypt, Huawei explore healthcare digital transformation cooperation    Egypt's Sisi, Sudan's Idris discuss strategic ties, stability    Egypt to inaugurate Grand Egyptian Museum on 1 November    Greco-Roman rock-cut tombs unearthed in Egypt's Aswan    Egypt reveals heritage e-training portal    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Insurance holding company established
Published in Daily News Egypt on 03 - 08 - 2006


Move may be precursor to privatization
CAIRO: President Hosni Mubarak issued a decree yesterday to form a holding company for insurance, bringing the four main public insurance firms as well as the country s only reinsurance company under the Ministry of Investment s asset management program.
The newly-formed entity complements the nine other holding companies that are central to the government s privatization strategy and to the Ministry of Investment s attempts to rationalize and improve the profitability of state assets.
The holding companies act as owners of a number of public businesses, with the notable exception of military production and oil and gas. The creation of a holding company for insurance centralizes the ownership of the public insurance sector and may be the first step towards restructuring and privatizing the industry.
Minister of Investment Mahmoud Mohieddin says in a statement that the ministry s general objectives will be to increase the rate of growth of the insurance sector and to generate new employment opportunities.
Mohieddin adds that the creation of the holding company will facilitate the restructuring of public insurance companies while encouraging related sectors such as real estate and investment.
We ve been waiting for so long for something like this, especially because the market share of public insurance companies has declined since the entry of international players, says Mahmoud Soheim, head of research at Naeem Holdings, a financial services and brokerage firm.
International firms have been engaged in the Egyptian insurance market for the past two decades, but the four public insurance companies have failed to keep up with foreign players. This resulted in a deteriorating financial condition of the public insurance companies.
They need to restructure before they go bankrupt, says Soheim. These companies, as with most of the public enterprises, never learned marketing ... Their employees do not care about profitability because their salaries are not tied to commissions.
Insurance and pension funds are two common sources of a substantial quantity of funds that are typically channeled towards secure investments with stable returns.
To date, however, the public insurance companies have failed to become active participants in new instruments that are more innovative and rewarding than treasury bills, such as securities that are backed by mortgages or other assets.
Meanwhile, because of the pay-as-you-go approach, public pension and social security funds have increasingly relied on support from the government in order to pay their beneficiaries. As a result, Ministry of Finance Youssef Boutros-Ghali says that 73 percent of benefits paid under the social security system come from the national treasury rather than from current contributors.
In order to improve the management of the social security system and of pension funds, these two areas were added to Boutros-Ghali s portfolio in the last cabinet reshuffle in December.
Investment and finance professionals anticipate these developments to change the way pension and insurance assets are managed, contributing to the development of a secondary mortgage market and other forms of securitization issues.
The decree also signals an expansion of the government s privatization program, which was initially focused on industrial activities. State-owned service companies are increasingly within Mohieddin s reach, beginning with the restructuring of financial services since the introduction of the unified banking law in 2003 and now expanding to the insurance sector.
Other policies are expected to be implemented in an attempt to encourage the growth of the insurance sector. These include the reduction of the stamp tax on insurance premiums from 26 percent to 13 percent and opening up the brokerage market to foreign companies.
The restructuring of the insurance market will help a sector, described by Soheim as a forgotten industry , fulfill its true potential as an important source of funds and a critical participant in the investment cycle.
.


Clic here to read the story from its source.