Tuesday, Jul 12, 2011
By Nicolas Parasie
OF ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Friends Life, part of U.K.-based Resolution Ltd. (RSL.LN), may consider developing shariah-compliant insurance as a way to grow its international presence in places such as the United Arab Emirates which bears stronger growth prospects than its domestic U.K. market, the group's chief executive said.
Friends Provident was acquired by Resolution in 2009 and Friends Life is the entity that combines the U.K. business of Friends Provident and the life insurance assets from Bupa and Axa UK it acquired last year. Friends Provident International has offices in Dubai, Hong Kong and Singapore, but the group is also active in Malaysia where it has a 30% stake in Amlife.
"Over 80% of our new business profits came from the international business. These are good-sized profit pools with significant growth potential, in particular the Middle East," Friends Life CEO Andy Briggs told Zawya Dow Jones in an interview in Dubai late Monday. Briggs, formerly CEO at Scottish Widows and head of the general insurance business at Lloyds Banking Group, took the helm at Friends Life last month.
The Middle Eastern life insurance industry is fragmented and small-scaled compared to developed markets. Its penetration rate is roughly 1% of gross domestic product, compared to between 9% and 11% in Western Europe or the Americas. Islamic insurance, or takaful, is one of the fastest-growing segments within that sector.
"It (offering takaful) still is something we are considering," Briggs said. Friends Life has obtained a takaful license in Malaysia through Amlife. "Our initial focus is to get that up and running, it will be a while to expand more broadly but it is certainly an option," he said.
Today's Middle Eastern insurance industry is mostly centered around property and casualty (P&C), while the life and savings segment remains underdeveloped, which makes it a potentially high-growth industry.
"People come to work here for a few years with a view to earn a lot more than they spend and clearly that is the right environment for a savings- focused organization," Briggs said.
Friends Life-owner Resolution, the acquisition and restructuring vehicle founded by entrepreneur Clive Cowdery, in May said first-quarter sales rose 52% to GBP270 million due to its recent acquisitions. Resolution is currently integrating these acquired assets. It said it would seek an annual cash generation of GBP400 million per annum from 2011 and synergies from integration and other cost savings totaling GBP112 million by the end of 2013.
The group is on track achieving those targets, Briggs said, who added the insurer probably won't pursue any acquisitions over the next 12 months that require equity.
-By Nicolas Parasie, Dow Jones Newswires; +9714 446-1681; nicolas.parasie@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
12-07-11 0739GMT
