Bahrain Insurance Report Q3 2012

Published : July 2012
No. of Pages : 72

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The Bahrain Insurance Report considers the prospects for both life and non-life insurers in the country. The latest results and comments indicate that 2011 was a highly challenging, but not universally disastrous, year for Bahrain’s insurance sector. We believe that premiums in the non-life segment actually contracted. This was partly the result of the ‘Arab Spring’ unrest in the first half of the year. It was also the consequence of a lacklustre economic environment (and the slump in the real estate and construction sectors). Further, price competition in what is, by any standard, a small and fragmented segment has been fairly intense. If this were not enough, particular players suffered from increased claims, whether because of damage relating to the unrest or other problems. The report of Bahrain National Holdings, published in mid-May 2012 in relation to its operations in Q112, suggests that these problems have persisted into this year.
Nevertheless, there are grounds for optimism. The government of Bahrain and its institutions have long been proponents of Islamic finance and takaful. The reports from the leading takaful (and retakaful) players suggest that this part of the market has been growing reasonably quickly. Further, the Central Bank of Bahrain (CBB) has, over the years, shown itself to be a first class regulator and agency for the general promotion and development of financial services. If takaful is one part of the market that is still growing, life insurance is another. Media reports and other (admittedly quite scant) data suggest to us that premiums have been rising. However, this growth has been concentrated in particular companies: several of the local life companies have suffered a contraction in their business. The companies that are expanding their life businesses in Bahrain are doing so as a result of bancassurance deals and product innovation. Both major segments can benefit from growing demand for insurance among the Kingdom’s population of Indian expatriates.
Reinsurance is something of a wildcard for Bahrain. Bahrain is not a major reinsurance centre like Singapore (let alone Bermuda), but it is an unusual market in that the reinsurance premiums that are booked are about 50% larger than the direct insurance premiums written. In early 2012, ARIG reported that its reinsurance premiums for the first three quarters of the year were about 7% higher than they had been in 2011. The company’s profitability had been hurt by disappointing investment returns and by higher claims (thanks, in part, to damages relating to ‘Arab Spring’ unrest throughout the Middle East and North Africa but mainly because of exposures to the massive natural catastrophes that took place last year). Other major reinsurers writing business in Bahrain include local group Trust International, Hannover Re, Hannover Re Takaful and ACR Retakaful. If the CBB is able to entice one or two more substantial insurance groups to commence operations in Bahrain – or the existing players dramatically increase their volumes of business – Bahrain could emerge as an important provider of reinsurance cover to insurance companies that are operating throughout the region.
Over the last quarter, BMI has made the following changes: 􀂃 The analysis incorporates BMI’s latest forecasts for Bahrain’s economy, including details in relation to auto sales and trends in the healthcare sector.
􀂃 The analysis incorporates the latest comments on developments of Bahrain National Holdings, as well as data pertaining from Ernst & Young’s World Takaful Report, which was published in Q212.

Executive Summary . 5
Table: Total Premiums, 2008-2016 ... 5
Key Insights And Key Risks . 5
SWOT Analysis . 7
Bahrain Insurance Industry SWOT 7
Bahrain Political SWOT 8
Bahrain Economic SWOT .. 8
Bahrain Business Environment SWOT ... 9
Life Sector ... 10
Middle East Life Sector Overview . 10
Table: Middle East And Africa Life Premiums, 2008-2016 (US$mn) .. 10
Bahrain Life Sector Update .. 12
Life Insurance Industry Forecast Scenario ... 13
Table: Life Premiums, 2008-2016 13
Growth Drivers And Risk Management Projections . 14
Population ... 14
Table: Insurance Key Drivers, Demographics 2008-2016 ... 14
Non-Life Sector ... 16
Middle East Non-Life Sector Overview . 16
Table: Middle East And Africa Non-Life Premiums, 2008-2016 (US$mn)... 16
Bahrain Non-Life Sector Update... 18
Non-Life Insurance Industry Forecast Scenario ... 20
Table: Total Non-Life Premiums 2008-2016 ... 20
Growth Drivers And Risk Management Projections . 22
Macroeconomic Outlook .. 22
Table: Macroeconomic Data And Forecasts 2008-2016.. 24
Political Stability Outlook 24
Healthcare ... 25
Table: Ministry Of Health''s Objectives 29
Table: National Health Insurance Scheme Breakdown 31
Table: Features Of Dilmunia Health Island 34
Epidemiology ... 35
Table: Insurance Key Drivers, Disease Adjusted Life Years 2008-2016 .. 36
Motor ... 38
Islamic Finance ... 39
Insurance Risk/Reward Ratings ... 41
Table: Bahrain’s Insurance Risk/Reward Ratings ... 41
Table: Middle East And Africa Insurance Risk/Reward Ratings .. 42
Competitive Landscape . 43
Competitive Landscape Analysis ... 43
Major Players In Bahrain’s Insurance Sector .. 44
Table: Breakdown Of Insurance Premiums, 2008-2009 (BHDmn) .. 45
Table: Breakdown Of Reinsurance Premiums, 2008-2009 (BHDmn) .. 45
Table: Ranking Of Non-Life Insurance Companies By Gross Written Premiums, 2008-2009 (BHD ‘000) . 46
Table: Ranking Of Life Insurance Companies By Gross Written Premiums, 2008-2009 (BHD ‘000) . 47
Company Profiles ... 48
Local Company Profiles ... 48
Bahrain National Holding Company ... 48
Regional Company Profiles .. 50
Allianz .. 50
Arab Insurance Group (ARIG). 52
Aviva 53
AXA .. 54
Chartis . 55
MAPFRE.. 57
MetLife ALICO 58
RSA .. 60
Zurich Insurance Group .. 62
BMI Methodology ... 64
Insurance Risk/Reward Ratings 66
Table: Insurance Risk/Reward Indicators And Rationale 66
Table: Weighting Of Indicators ... 67
Demographic Outlook 68
Table: Bahrain''s Population By Age Group, 1990-2020 (''000) ... 69
Table: Bahrain''s Population By Age Group, 1990-2020 (% of total)... 70
Table: Bahrain''s Key Population Ratios, 1990-2020 ... 71
fBahrain''s Rural And Urban Population, 1990-2020 ... 71Table: Total Premiums, 2008-2016 . 5

Table: Middle East And Africa Life Premiums, 2008-2016 (US$mn) . 10

Table: Life Premiums, 2008-2016 . 13

Table: Insurance Key Drivers, Demographics 2008-2016 . 14

Table: Middle East And Africa Non-Life Premiums, 2008-2016 (US$mn). 16

Table: Total Non-Life Premiums 2008-2016 . 20

Table: Macroeconomic Data And Forecasts 2008-2016. 24

Table: Ministry Of Health''s Objectives . 29

Table: National Health Insurance Scheme Breakdown . 31

Table: Features Of Dilmunia Health Island . 34

Table: Insurance Key Drivers, Disease Adjusted Life Years 2008-2016 . 36

Table: Bahrain''s Insurance Risk/Reward Ratings . 41

Table: Middle East And Africa Insurance Risk/Reward Ratings . 42

Table: Breakdown Of Insurance Premiums, 2008-2009 (BHDmn) . 45

Table: Breakdown Of Reinsurance Premiums, 2008-2009 (BHDmn) . 45

Table: Ranking Of Non-Life Insurance Companies By Gross Written Premiums, 2008-2009 (BHD ‘000) . 46

Table: Ranking Of Life Insurance Companies By Gross Written Premiums, 2008-2009 (BHD ‘000) . 47

Chartis . 55

Table: Insurance Risk/Reward Indicators And Rationale . 66

Table: Weighting Of Indicators . 67

Table: Bahrain''s Population By Age Group, 1990-2020 (''000) . 69

Table: Bahrain''s Population By Age Group, 1990-2020 (% of total). 70

Table: Bahrain''s Key Population Ratios, 1990-2020 . 71

Bahrain Insurance Report Q3 2012

Published By: Business Monitor International

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