Zurich Financial eyes bolt-on buys in emerging markets
Takaful industry seen growing 15 pct annually for 5 yrs.
October 27, 2010 1:39 by Reuters
Swiss insurer Zurich Financial Services AG will continue to eye bolt-on acquisitions in emerging markets and sees Islamic insurance, or takaful, as key to growing its Middle Eastern business, a senior executive said.
“We have always looked and we will on a going forward basis always look to bolt-on acquisitions…that would mean growth markets and the emerging markets,” Axel Lehmann, the group’s chief risk officer, told reporters on the sidelines of an insurance conference in Dubai on Wednesday.
Zurich earlier in October said it bought privately-owned Lebanese insurer Compagnie Libanaise D’Assurances and recently set up a management unit dedicated to the wider Middle East and Africa region.
The insurer is betting on sharia-compliant insurance sector, corporates and large commercial businesses to grow its presence in the wider Middle East, Lehmann said.
“Takaful is a key business that we have and we look continuously to strengthen it,” he said.
Analysts expect the sharia-compliant insurance sector to grow nearly 15 percent annually in the next five years and exceed $7 billion in premium income.
“The region has strong growth, we’re definitely looking into double-digit growth,” Lehmann said.
With a penetration rate of around 1 percent of gross domestic product (GDP), the overall Middle Eastern insurance sector lags mature markets but its enormous growth potential has already attracted global heavyweights such as AXA and Allianz.
Gross premiums in the United Arab Emirates grew by around 10 percent in 2009 led by life and savings, Paul Koster, chief executive of Dubai Financial Services Authority, told the conference earlier on Wednesday.
“The growing awareness and acceptance of Islamic insurance appears to be opening up a significant growth opportunity,” Koster said.
(Editing by Jason Benham)