The Egyptian Life Takaful Company garnered some EGP 60m in installments by the end of the first half of the 2012/2013 financial year. Hesham Abdel Shakour, the CEO of the company, revealed to Al-Borsa that his company is targeting EGP 120m installment dues by the end of the current year, noting that they achieved EGP 45m in installments after the first year of restructuring the company in 2011. He said that the company achieved EGP 16m by 30 June 2011, which points to the stability of the installments growth rate above 250% annually, the same rate targeted by the end of the year. He said the company seeks to top the insurance market, both in terms of offering conventional and takaful insurance products, by offering high-quality products that fit customers' needs through adequate pricing, explaining that the products offered by the company recently boosted growth rates in the last two years after the company's restructuring in 2011. Egyptian Life was established in 2006 as the first joint stock company offering takaful products in Egypt, a Shari'a-compliant form of insurance, with EGP 500m authorised capital and EGP 100m in paid-up capital. The company is distributed as follows: 59.5% for the Gulf Insurance Company, 8.25% for the Faisal Islamic Bank, 8.25% for the Misr Iran Development Bank, 8% for Banque Misr and 8% for both National Bank of Egypt (NBE) and the Social Fund for Development (SFD). Abdel Shakour talked about informing the Egyptian Financial Supervisory Authority (EFSA) of unifying the group's logo, while at the same time holding on to the current name of Egyptian Life Takaful Company. He mentioned that the Kuwaiti Gulf insurance Group is the biggest company in Kuwait in terms of the subscribed installments kept through its operations in the sectors of life and properties insurance, but that it also resorts to the biggest companies in the world for reinsurance. He also said that the company is seeking to expand in the field of medical insurance by offering special services for clients. Egyptian Life hopes to achieve EGP 40m to EGP 50m by the end of the year, topping the medical insurance market, which is one of the fastest growing insurance markets, within five years. He noted that his company is the first to offer medical services to syndicate members, and has concluded no less than 100 collective insurance deals. He stated that Egyptian Life seeks to contract a deal with one of the biggest reinsurance companies in the medical field, besides the French company Score, and that his company also offers reinsurance services for some of the biggest companies in the field, such as like Munich Re and Takaful Re. Abdel Shakour denied the company's intention to establish new branches during the current year, noting that it has 12 branches all over the country, and confirming that it aims to top the insurance market for the coming period based upon achieved growth rates. He added that banking insurance represents more than 60% of the marketing opportunities for insurance products, noting that the company succeeded in achieving its targets through innovative marketing tools like direct marketing. Abdel Shakour mentioned the scarcity of investment channels compliant with Islamic Shari'a in the Egyptian market; they are limited to the treasury bills and the governmental Shari'a-compliant bonds that generate revenues for the company and the state. He added that the scarcity of investment channels is one of the biggest challenges faced by the solidarity insurance market, and that the law prohibits investing in foreign multiple instruments with high returns from bonds and long term investment funds. He explained that there is no Shari'a-compliant long term investment funds in Egypt and the life insurance contracts exceed 15 years which shrinks the investment opportunities. He added that sukuk are the most important Shari'a-compliant investment channel. They began a few years ago in the Gulf market and establishing them in Egypt is considered a serious step in developing the solidarity market and maximising its investments and returns, even though it came very late. However, issuing them with the state's guarantee means the losing these assets in light of the economic conditions of the country, especially after downgrading Egypt's credit rating more than one time. This was the principal reason for Al-Azhar's opposition to the project, suggesting that it can be delayed until economic circumstances improve. In the same context, the CEO of Egyptian Solidarity Insurance revealed that the company invests in short term funds, which are not considered as debts tools, beside some Shari'a-compliant stocks with an EGP 70m portfolio. Abdel Shakour criticised the investment quotas imposed by the Financial Supervisory Authority (EFSA) noting that the law stipulates that the bank's deposits must consist of at least 50% of the investment portfolio, which the company is unable to do because it is not Shari'a-compliant. He added that EFSA's purpose is to keep the customers' money in investment channels with low risk ratios and to preserve the stability of the market, maximising banks' competitive advantage in attracting more local and foreign investments. He asked for establishing internal legislations for solidarity insurance because it is different than the commercial one; the former are subject to an internal supervision by many entities, in addition to the multitude of financial statements that exceed requirements for the commercial insurance companies. Abdel Shakour denied that there is a real competition in the solidarity insurance market, explaining that first the market saturation comes, and then the competition takes place through new instruments with good prices. The CEO of Hayah-Egypt criticised some commercial insurance companies who issue products that claim to have solidarity components to attract the customers, which reflects the lack of credibility in selling these products, saying that it's unfair to overwhelm the market with solidarity instruments in this way. He praised EFSA's decision to separate the life insurance from the properties activities explaining that it helped eradicate price speculations practiced by some companies depending on the profits achieved in the other sectors. He said that losses occurred by the companies after the separation pushed the insurers to tighten their conditions to bring the prices closer to the real value. Abdel Shakour expected that the solidarity insurance market will witness a great expansion in the future, resulting in achieved growth rates and the world countries adopting the Islamic economy after the global crisis. He emphasised the importance of the international solidarity conference for the insurance market in Egypt, stating it will help raise the people's awareness of insurance. Abdel Shakour also expected an increase in the popularity of the insurance market with some international companies, especially after high growth rates are achieved. He stated that the Egyptian market, which was the leading insurance sector in the region, suffers from the lack of reinsurance corporations after the merger of the public sector reinsurance companies that was achieving high growth rates. Despite the existence of these kinds of companies in the emerging markets, he called for the creation of a reinsurance company in the Egyptian market. He added that some big companies in the market need to be restructured to preserve its leading position and to face the competition of the emerging firms. Abdel Shakour explained that the Central Bank's decision to stop the banking insurance five years ago resulted from wrong practices performed by some companies. He criticised the Central Bank forcing banks to contribute in the insurance companies to reactivate banking insurance, saying the bank will be denied the advantages offered by other companies. He hoped that the new Central Bank governor, Hesham Ramez, will work on solving this issue. He denied that life insurance was affected by the increase in the US dollar's price in the same way as some of the properties insurance categories, like maritime and vehicles, except in some cases where customers want to save in US dollar bonds with high returns. Abdel Shakour said that the integral health insurance law will provide perfect medical services for Egyptians but it doesn't have the mechanisms to be practically applied because of the lack of infrastructure and medical logistics in the government. He concluded that the law will affect the health insurance sector in the mean time, linking the stoppage of issuing health insurance documents by insurance companies to the lack of governmental capacities, unlike private companies who are qualified to offer these services.
