Beirut (APD) - State-owned National Insurance Company of Egypt (NICE) will launch an initial public offering (IPO) for 40% in its joint-venture subsidiary serving the Saudi market, the Riyadh-based business daily al-Iqtisadiya reported Friday.
"The stake of NICE in the company will be 15% while Saudi institutional and individual investors will have a combined stake of 45%. The remaining 40% will be offered in an IPO," Mohamed Abulyazid Abdallah chairman of NICE told al-Iqtisadiya.
The firm started its activities in Saudi Arabia in 1994 as a Manama-based branch of NICE and later was converted into an Egyptian-Saudi joint stock company registered in Bahrain. Details of its activities in the past three years were not clarified in the newspaper report.
In the process of changing its status and structure to become incorporated in Saudi Arabia, the insurer's new Arabic name could be translated as Egyptian-Saudi National Mutual Insurance Company or as National Insurance Company of Egypt and Saudi Arabia for Mutual Insurance.
Private sector insurance firms with operations in Saudi Arabia until recently could access this market only through offshore subsidiaries from Bahrain. After the Saudi government revised the national insurance law in 2004, authorities last year announced that insurance license applications had been processed for a number of private sector providers and that start of their operations could be expected soon.
Several regional insurance companies have high hopes for the Saudi market, which has a strong need for medical insurance due to the phasing in of mandatory medical coverage. Also in other segments, the underinsured Kingdom is seen as a market with huge growth potentials.
The Egyptian-Saudi joint insurer with NICE stake holding meets all regulations of the Kingdom's recent insurance law and fulfills the requirement for a minimum fully-paid capital of SR 100 million ($26.66 million), Abdallah said, adding that the company would be among Saudi Arabia's first batch of new insurance firms to be licensed.
In related news, Abdallah announced that NICE intends to convert its branch in Qatar into a joint stock company through partnership with Qatari investors.
"We are endeavoring to achieve this in the near future," he said.
NICE, along with two other insurers and one reinsurance company owned by the Egyptian state, are privatization candidates.
A study concerning the privatization of NICE, Misr Insurance Company, Al Chark Insurance Company and The Egyptian Reinsurance Company is underway and results are expected within one year, Abdallah said.
"Privatization of the insurance companies will give these companies more flexibility to improve their performance and to choose their own boards of directors," he added.
One year ago, Egyptian officials had named a three-year timeframe for privatization of the state-owned insurers.
NICE is the oldest insurance company in the Middle East and was established in 1900. It provides all classes of insurance. [TS]
By Shikrallah Nakhoul, APD Staff Writer in Beirut
© APD (Arab Press Digest) 2006
