Dubai: French insurance giant Axa, in combination with the Kanoo Group, expects to take the fight to the international insurers dominating the UAE’s life insurance and savings product category, generating a premium income of $2.4 billion (Dh8.8 billion, based on 2014 estimates).
Life is now believed to be the second largest premium generator (estimated at 23 per cent) in the country after health, which accounts for $3 billion plus annually (and a 30 per cent share).
This follows Axa and Kanoo acquiring a stake in Abu Dhabi headquartered life and health insurer Green Crescent late last year. This was facilitated through the conversion of a Dh100 million bond into Green Crescent equity, with Kanoo Group holding 29 per cent and Axa with 21 per cent. The company has since been renamed Axa Green Crescent — with a paid-up capital of Dh200 million — and will continue to be listed on the Abu Dhabi bourse.
“There are currently 68 licensed insurers in the UAE, with 28 of them dedicated to selling life insurance products,” said Hassen Bennour, CEO of Axa Green Crescent. “Eighty per cent of the life policies sold are from international insurers at exorbitant premiums. Axa Green Crescent will be coming in at a “light” premium.”
Bennour added that the practice of insurers selling both life and non-life products could also change under regulatory guidelines. The regulations are already becoming tougher for insurers in terms of how they can generate investment income through exposure in real estate and equity. On the operational side, last year was an exceptionally tough one with even the bigger “national” insurers posting losses.
Selling life insurances had until the recent past proved a difficult sell in the UAE/Gulf. So much so, unlike in most mature insurance markets, premium generated by general insurance lines is actually bigger than that for life.
The sizeable expat resident base and the relatively short-term duration of their stays here were factors that held back growth prospects for life earlier. But that is changing with insurers bringing about specialised products, while Axa Green Crescent will also go for opportunities in group life insurance and employee benefit schemes.
The firm’s intention is to get to a market leader status in the UAE — with a 7-10 per cent share — in the next 10 years. There are no plans as of now to get a life license for some of the other Gulf markets.
“The UAE life insurance is 85 per cent of the Gulf’s,” said Mishal Kanoo, National Deputy Chairman, The Kanoo Group, UAE and Oman.
“This investment by Kanoo Group is not for the short term … It’s not something that people need notice immediately.
“But time can transform something that looks dull into a significant play … and a profitable one.”
He added that there are no plans by his group or Axa to acquire the stakes held by the original promoters in Axa Green Crescent.
Except for 2014, when it made a nominal profit, the life insurer had accumulated significant losses in previous years. In 2014, it had an overall premium income of Dh100 million plus. But the firm’s overall strategy will now change, according to Bennour.
“That Dh100 million includes a sizeable share of group health insurance policies,” he said. “In 2015 we significantly pruned the share of health by becoming selective in writing new health business. Going forward, we will continue to have a presence in health until such time life and savings become the dominant presence.”
