Market valuations of insurance companies in the first month of the year were decidedly positive for the leading insurance companies and provide testimonials to price recoveries accomplished in 2009.
At the beginning of 2010, eight insurance companies in the MENA region could boast of having market capitalization above $500 million each. Stock price gains in the course of 2009 let the six GCC-based firms in this top group enter January with $5.3 billion in cumulative share valuations.
Three of the six large insurance companies hailing from the GCC are headquartered in the UAE, two in Saudi Arabia, and one in Qatar. The other two companies are Moroccan.
The recovery of this top GCC group was strong vis-à-vis 2008 when the impact of the markets crisis had molten the aggregate market cap of the same providers to $3.7 billion at yearend.
Versus the ebullient state of valuations at the end of 2007, there is still room for prices to catch up though – five of what are today the six largest insurance companies in the GCC had a combined market cap of just over $6 billion at the end of 2007.
But to put the gains of insurance stocks and the industry’s role in regional equities further into perspective, one does well to consider that the stock prices of five petrochemicals companies listed on the SSE rose also with great vigor in 2009 – and represented, at the start of 2010, an aggregate market capitalization of over $85 billion (with Sabic accounting for four fifths of this amount).
New Players, More Products
Stock Market Opportunities
First, investors and analysts of insurance performances on the Saudi Stock Exchange can highlight two Mondays on their calendars, February 8 and 15 and they will not be blue – more likely hot and up.
Gulf General Cooperative and Buruj Cooperative, the two Saudi insurance providers that completed the subscription phases of their initial public offerings in October of last year, have been green-lighted to start trading on these dates. Gulf General will commence trading on Feb 8, Buruj will have its debut on Feb 15.
Two other Saudi insurers, Alahli Takaful and Saudi Fransi Cooperative have both announced plans in January to increase their capital through rights issues, with dates and pricing to be determined pending shareholder approvals. Alahli is looking at a 150% rights issue and Saudi Fransi Cooperative, at a 25% issue. Each company currently has 10 million shares outstanding.
Still in the oven but not yet completely visible are initial public offerings for Solidarity Takaful and presumably two other insurance companies. Their IPO schedules have been expected for release but to date the timelines have remained veiled by the market authorities.
Product Licensing Announcements
Several insurers in the Saudi market have posted statements last month to say that the Saudi Arabian Monetary Agency issued approvals for their products.
The announcing companies were, in chronological order of their disclosures, Tawuniya (personal accident, medical, liability, casualty, property, group life, over 60 products in total), Alahli Takaful (group credit life), Allied Cooperative (health and five other products), Al Alamiya (health), Al Rajhi Cooperative (transport, personal, labor), Axa Cooperative (medical and motor), and Ace Arabia (18 products, no specifics). Some of the approvals were said to be on 6-month temporary basis.
Earnings and Changes at the Helms
The Leadership Shuffles
For a still rather small sector, the insurance industry of Saudi Arabia had a surprisingly large number of changes in board memberships and senior managements to report in January 2010, even when taking into account that this is a traditional changeover month. At least seven listed insurance companies – more than a quarter of this young industry – posted change announcements.
CEO departures and/or new GM appointments were announced by Sanad Insurance, Gulf Union Cooperative, Al Sagr, and Ace Arabia. Board member appointments and/or resignations took place at Axa Cooperative, Tawuniya, SABB Takaful, and Saudi United Cooperative.
Counter to an apparent taste for directorate revamping in Kuwait, no KSE-listed insurer informed of such a measure in January and neither did insurers in Bahrain or Oman.
Shuffles in the uppermost insurance company floors have, however, also been reported from the UAE stock markets, although at a lesser rate than in the Saudi kingdom. Abu Dhabi National Takaful Co and Dubai National Insurance and Reinsurance each gave note of appointing a new general manager at the end of January; the resignation of its GM in January and appointment of a new CEO had already been announced back at the end of December by DFM-listed Dar Al Takaful.
The changes on the directorate level deserve attention because of their implications for governance, commented Beirut-based insurance expert Ibrahim Muhanna in conversation with the NBT blog.
With 18 companies reporting from Saudi Arabia, insurance net profit trends from the region’s largest economy show clear improvements, first through the 360% rise in net results of veteran company, Tawuniya, which opened the reporting show on January 18.
By Jan 20, the number of annual profits disclosures had swelled to 19 companies, of which 10 besides Tawuniya had improvements of results to present. The improvers were split evenly between firms that reduced losses and firms that rose into the black from losses in 2008.
For five companies, the year had been not as positive as they incurred either higher losses or saw profits contract (the latter group included the country’s only listed reinsurer). Results of three companies were somewhat inconclusive from a first-glance comparison perspective, because of incomparability of reporting periods.
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