Egypt - Strong insurance performance forecasted over next 18 months
Source: Middle East Insurance Review | Nov 2016
The Egyptian insurance market should see strong premium and profit growth in the next 12-18 months aided by the country’s gradual economic recovery, said Moody’s Investors Service in a report.
In its report, “Insurance - Egypt; Expected Gradual Economic Recovery Will Drive Premium and Profit Growth for Egyptian Insurers”, Moody’s estimates real GDP growth of 3% for the June 2016 fiscal year end, and averaging 4%-4.5% per year until 2019 (4.2% in financial year 2015 and 2.2% in 2014).
“The Egyptian insurance market may be small but is one of the fastest growing in the world with plenty of untapped potential,” said Mr Mohammed Ali Londe, an Assistant Vice President at Moody’s. “Absent of any political or economic upheaval, we expect the market to expand in double-digit figures, helping to cement improving profitability post-revolution.”
In addition, Moody’s expects the market to benefit from a number of large-scale infrastructure projects – in mining, oil & gas, power generation and transmission, and housing – both from providing direct insurance cover and because any resulting job creation will support the expansion of the commercial and personal lines of business.
However, the Egyptian insurance industry still faces various challenges, one of which is high sector concentration. “The top six players in the Egyptian insurance market account for 69% of total premiums written in financial year 2015,” explained Mr Londe. “The rest of the market is fragmented, leading to unfavourable pricing practices and operating performance volatility, especially among the smaller players.”