12 February 2017

By Yasmine Saleh

Zurich Insurance Company will continue to focus on the United Arab Emirates (UAE) as its prime market in the Gulf Arab region and does not plan to open offices in Saudi Arabia in the near future, instead pursing new opportunities in African countries that are less dependent on oil revenues, a senior company official said.

The Gulf insurance sector, like several other industries, has suffered from a slowdown in economic growth following a steep decline in oil prices that started in mid-2014. Saudi Arabia, the world’s largest oil exporter and the region’s biggest economy, is trying to eliminate a huge budget deficit left by low oil prices. Read more here.

“We see an effect due to the oil prices that is very true. It affects our business pipeline,” Peter Englund, chief executive officer for global corporate in the Middle East, told Zawya in an interview.

“But our model is a very flexible one, so we look for alternative markets or (markets) not as oil dependent. One of Zurich’s strengths is our ability to put together multinational programs for all over the world,” he added.

Swiss-based Zurich has been operating in the Middle East for almost 30 years, with offices in the UAE, Bahrain and Qatar and distribution partners in other countries, including Saudi Arabia. The firm mainly operates in the life, corporate, property, construction and energy insurance markets in the Gulf Cooperation Council (GCC) region. It also insures oil rigs.


Targeting the emirates

The UAE economy is more diversified than that of its Gulf neighbours, with strong tourism, finance and construction sectors and is therefore a the main focus for Zurich in the GCC.

“We refer to it (the UAE) as an emerging market, a growing market. So there will be a lot of investments in everything from renewable energy and infrastructure projects, and we can see here around us in the UAE investments in theme parks for instance, which calls for insurance, and in which we can assist,” Englund said. “We believe in the UAE going forward.” 

Another area of growth in the UAE is the small and medium-sized enterprises (SMEs) sector. Zurich’s account manager handling insurance for SMEs, Jason Waldron, told Zawya that there are 350,000 SMEs in the UAE, accounting for around 95 percent of all businesses in the country. He said the firm has managed to attract 127 of those clients, with a total insurance value of $450 million, since launching a new product line for SMEs in February 2014.

Englund said that although Saudi Arabia is a key market for the company in the long term, Zurich does not plan to open offices there in the “coming one to two years”.

The UAE and Saudi Arabia are the first and second biggest insurance markets in the GCC, respectively. Together, they control around 70 percent of the GCC insurance market. Read more here.

Saudi Arabia is the world’s largest Islamic insurance market in terms of assets, according to Thomson Reuters data. However only four companies -- Bupa Arabia, state-run Tawuniya, Medgulf and Malath - control around 59 percent of the market, according to Turki Fadaak, head of research and advisory at the Saudi-based Albilad Capital investment firm said.


Into Africa

Looking away from the GCC, Englund said the company is looking further afield to potential new opportunities in Africa. “An opportunity that is also sometimes forgotten is Africa, which has similar characteristics to the GCC in terms of low insurance penetration and also a growing economy… I see a lot of very positive signs over in Africa and that includes both the north and also the south Sub-Saharan Africa,” Englund added.

He said the company is following new investments in the energy and renewable energy sectors in different African countries, from Morocco in the north to Mozambique in the South East. Nigeria and Morocco have signed last year a joint venture to construct a gas pipeline that will connect the two nations, as well as some other African countries to Europe, Reuters reported.

© Zawya 2017