26 August 2008
The insurance market in the UAE is very promising and is growing in step with the country's economy, said a top official of Al Khazna Insurance Company, one of the largest UAE national insurance firms.
In an interview with Emirates Business, Mohammed Jassim Al Jassim, General Manager of the company, said the decision to allow foreigners to own 25 per cent of Al Khazna's shares was necessary and in line with the Abu Dhabi Government's rules for foreign equity participation. Part foreign ownership grants safety and confidence to UAE national shareholders, he added.
Al Jassim also said Al Khazna has turned a corner after its losses in the previous years and is looking forward to continuous growth in profits after a change in top management and future strategy. In fact, going by the results in late 2007 and so far this year, that change is already helping.
He also said foreign insurance companies in the UAE, especially those with large parent companies, are queering the pitch for local companies and hoped the new insurance authority would move to allow a more level playing field for UAE national outfits.
What is your evaluation of Al Khazna Insurance Company's performance since the beginning of the year, especially after the company returned into the black after years of losses?
Al Khazna Insurance Company is one of the biggest insurance companies in the UAE and the Gulf in terms of capital, which is Dh400 million. It also comes in the ninth position among the 150 biggest insurance firms in Arab countries in terms of paid-up capital and in the 13th position in terms of assets.
It is a public joint stock company, which went through a difficult time in the recent past. However, after a new board of directors took charge and after I was assigned to run the company eight months ago, we drew up a new strategy and organisational structure and brought in experienced manpower in order to improve the company's performance.
In the last quarter of 2007, we hit net profits of around Dh138m and paid out Dh40m as dividends. In June this year, net profits were at Dh59m. Premium income went up to Dh62m during the first quarter of 2008 and to Dh58m during the second quarter. So the company has managed to go in the right direction and has restored its reputation in the financial market.
The Ministry of Economy recently approved 25 per cent foreign ownership of the company's shares. What are the reasons that pushed you to make foreigners participate in the company?
The Ministry of Economy's approval for 25 per cent foreign ownership of the company's shares came after an application was submitted by the company's board. The step is a very healthy and necessary one for many reasons.
Firstly, it is in line with the instructions of the Abu Dhabi government to allow foreign ownership. Secondly, it gives an opportunity to a big and important category of shareholders to enter the market. Thirdly, it enhances the company's spread-out and strength in the market and increases fair competition with insurance companies in the UAE.
Finally, it gives us the opportunity to increase our coverage outside the UAE and into nearby countries. Part foreign ownership gives a safety net and peace of mind to UAE national shareholders. In addition, the foreigners will benefit the company through their financial strength. There are no fears of a foreign takeover in future because the percentage offered for foreign ownership is 25 per cent and it will not be owned by one foreigner but distributed among many.
Several traders at the Abu Dhabi Securities Exchange (ADX) fear the company's stock may decline, as it happened before. How real are these fears?
These fears are justifiable. The company has previously suffered losses that affected its share price in the ADX. However, with the changes that happened recently in the company, the situation is totally different. The company's profits and financial results positively affected the share price, which is on the rise. That gave investors bigger confidence and credibility. I think the time of losses has ended. The presence of UAE national leadership on the company's board has made investors feel its performance will be strong.
We have set up investment subsidiaries and are studying new projects in Abu Dhabi in property development and other services. Our aim behind all this is to create new investment opportunities that generate big revenues for our shareholders.
How do you assess the insurance sector in the UAE and in Abu Dhabi? Is the current number of insurance firms in Abu Dhabi enough?
The insurance market in the UAE is very promising and is growing rapidly in line with the country's economy. I think the demand for insurance in Abu Dhabi is growing fast. The reasons behind it are the diversification of the capital's business activities, the population increase and the large presence of foreigners. We urgently need to increase the number of insurance companies in Abu Dhabi to create a spirit of fair competition.
The insurance market in the UAE is still weak. What, in your opinion, is the reason for that?
I think the opportunities in the UAE are not sufficiently exploited. There are many sectors that need insurance. Currently, only medical and car insurance are compulsory.
There are other sectors that could bring in big revenues and contribute to economic development if they were made compulsory, such as insurance against professional mistakes for doctors, lawyers, engineers, etc. The involvement of insurance companies in these fields will create investment and job opportunities that the country's economy will benefit from.
Insurance companies are often criticised for over-valuing the assets they insure in order to charge higher premiums, especially for medical and car insurance. What is your opinion on that?
In general, there is no over-valuing of assets by insurance companies in their policies. The premiums, too, are logical and in line with the income of UAE nationals and expatriates. However, it is impossible to satisfy all customers.
How do you evaluate the performance of foreign insurance companies in the UAE?
Having foreign insurance companies in the UAE is definitely healthy for the economy at a time when the country's economy is being diversified.
However, we have noticed that a number of foreign companies, including those from other Gulf countries, contribute to lowering prices in the UAE market.
Their parent companies have huge technical and marketing abilities, which are used to support the UAE branches.
I think allowing such companies to operate alongside UAE national public joint stock companies is doing injustice to the latter. The new insurance authority, I hope, will intervene to fix specific sectors of operations for the foreign companies.
Profile: Mohammed Jassim Al Jassim, General Manager, Al Khazna Insurance
Al Jassim, 53, started his career in hospital management in Bahrain, before joining the insurance sector.
With more than 18 years of experience in the Gulf's insurance sector, he joined Al Khazna Insurance Company as General Manager eight months ago and drew up future plans for the company. Al Jassim has a Master's degree in business and hospital management from the United States.
The insurance market in the UAE is very promising and is growing in step with the country's economy, said a top official of Al Khazna Insurance Company, one of the largest UAE national insurance firms.
In an interview with Emirates Business, Mohammed Jassim Al Jassim, General Manager of the company, said the decision to allow foreigners to own 25 per cent of Al Khazna's shares was necessary and in line with the Abu Dhabi Government's rules for foreign equity participation. Part foreign ownership grants safety and confidence to UAE national shareholders, he added.
Al Jassim also said Al Khazna has turned a corner after its losses in the previous years and is looking forward to continuous growth in profits after a change in top management and future strategy. In fact, going by the results in late 2007 and so far this year, that change is already helping.
He also said foreign insurance companies in the UAE, especially those with large parent companies, are queering the pitch for local companies and hoped the new insurance authority would move to allow a more level playing field for UAE national outfits.
What is your evaluation of Al Khazna Insurance Company's performance since the beginning of the year, especially after the company returned into the black after years of losses?
Al Khazna Insurance Company is one of the biggest insurance companies in the UAE and the Gulf in terms of capital, which is Dh400 million. It also comes in the ninth position among the 150 biggest insurance firms in Arab countries in terms of paid-up capital and in the 13th position in terms of assets.
It is a public joint stock company, which went through a difficult time in the recent past. However, after a new board of directors took charge and after I was assigned to run the company eight months ago, we drew up a new strategy and organisational structure and brought in experienced manpower in order to improve the company's performance.
In the last quarter of 2007, we hit net profits of around Dh138m and paid out Dh40m as dividends. In June this year, net profits were at Dh59m. Premium income went up to Dh62m during the first quarter of 2008 and to Dh58m during the second quarter. So the company has managed to go in the right direction and has restored its reputation in the financial market.
The Ministry of Economy recently approved 25 per cent foreign ownership of the company's shares. What are the reasons that pushed you to make foreigners participate in the company?
The Ministry of Economy's approval for 25 per cent foreign ownership of the company's shares came after an application was submitted by the company's board. The step is a very healthy and necessary one for many reasons.
Firstly, it is in line with the instructions of the Abu Dhabi government to allow foreign ownership. Secondly, it gives an opportunity to a big and important category of shareholders to enter the market. Thirdly, it enhances the company's spread-out and strength in the market and increases fair competition with insurance companies in the UAE.
Finally, it gives us the opportunity to increase our coverage outside the UAE and into nearby countries. Part foreign ownership gives a safety net and peace of mind to UAE national shareholders. In addition, the foreigners will benefit the company through their financial strength. There are no fears of a foreign takeover in future because the percentage offered for foreign ownership is 25 per cent and it will not be owned by one foreigner but distributed among many.
Several traders at the Abu Dhabi Securities Exchange (ADX) fear the company's stock may decline, as it happened before. How real are these fears?
These fears are justifiable. The company has previously suffered losses that affected its share price in the ADX. However, with the changes that happened recently in the company, the situation is totally different. The company's profits and financial results positively affected the share price, which is on the rise. That gave investors bigger confidence and credibility. I think the time of losses has ended. The presence of UAE national leadership on the company's board has made investors feel its performance will be strong.
We have set up investment subsidiaries and are studying new projects in Abu Dhabi in property development and other services. Our aim behind all this is to create new investment opportunities that generate big revenues for our shareholders.
How do you assess the insurance sector in the UAE and in Abu Dhabi? Is the current number of insurance firms in Abu Dhabi enough?
The insurance market in the UAE is very promising and is growing rapidly in line with the country's economy. I think the demand for insurance in Abu Dhabi is growing fast. The reasons behind it are the diversification of the capital's business activities, the population increase and the large presence of foreigners. We urgently need to increase the number of insurance companies in Abu Dhabi to create a spirit of fair competition.
The insurance market in the UAE is still weak. What, in your opinion, is the reason for that?
I think the opportunities in the UAE are not sufficiently exploited. There are many sectors that need insurance. Currently, only medical and car insurance are compulsory.
There are other sectors that could bring in big revenues and contribute to economic development if they were made compulsory, such as insurance against professional mistakes for doctors, lawyers, engineers, etc. The involvement of insurance companies in these fields will create investment and job opportunities that the country's economy will benefit from.
Insurance companies are often criticised for over-valuing the assets they insure in order to charge higher premiums, especially for medical and car insurance. What is your opinion on that?
In general, there is no over-valuing of assets by insurance companies in their policies. The premiums, too, are logical and in line with the income of UAE nationals and expatriates. However, it is impossible to satisfy all customers.
How do you evaluate the performance of foreign insurance companies in the UAE?
Having foreign insurance companies in the UAE is definitely healthy for the economy at a time when the country's economy is being diversified.
However, we have noticed that a number of foreign companies, including those from other Gulf countries, contribute to lowering prices in the UAE market.
Their parent companies have huge technical and marketing abilities, which are used to support the UAE branches.
I think allowing such companies to operate alongside UAE national public joint stock companies is doing injustice to the latter. The new insurance authority, I hope, will intervene to fix specific sectors of operations for the foreign companies.
Profile: Mohammed Jassim Al Jassim, General Manager, Al Khazna Insurance
Al Jassim, 53, started his career in hospital management in Bahrain, before joining the insurance sector.
With more than 18 years of experience in the Gulf's insurance sector, he joined Al Khazna Insurance Company as General Manager eight months ago and drew up future plans for the company. Al Jassim has a Master's degree in business and hospital management from the United States.
By Abdel Hai Mohamed
© Emirates Business 24/7 2008
