THE 2ND INTERNATIONAL ISTANBUL INSURANCE CONFERENCE (İstanbul 30 September – 1 October 2010) 1

“Recent Re/Insurance Trends MENA Region in the MENA Region” By Gökhan AKTAŞ (Chief Area Underwriter – Milli Re) 2

3 MENA Region Insurance Sector in General  Low insurance penetration 3 Insurance Penetration 2009 (%) GCC : 1,4% MENA : 1,6% World : 7%

MENA Region Insurance Sector in General  Very soft market / Cut-throat price competition  “Young” insurance regulation differing across the Region  A number of players with low capital levels when compared with international standards 4

MENA Region Insurance Sector in General  MENA Insurance markets rank below the world average with a contribution of 0,53% to the total world premium 5 Total premium volume (millions of USD) 2009 Share of world market (%) Life premium volume (millions of USD) Share of world market (%) Non-life premium volume (millions of USD) Share of world market (%) Insurance Premiums 2009 Middle East (ME) UAE5.1130,137320, ,25 Iran4.3160,112250, ,24 Saudi Arabia3.8960,102670, ,21 Lebanon9520,022320,017200,04 Qatar7730, ,04 Oman6270, ,03 Jordan5100, ,03 Bahrain4940,011370,013570,02 Kuwait4570, ,02 Sub-total ME ,392,2070, ,80

Total premium volume (millions of USD) 2009 Share of world market (%) Life premium volume (millions of USD) Share of world market (%) Non-life premium volume (millions of USD) Share of world market (%) North Africa (NA) Morocco2.5830,068250, ,10 Egypt1.5650,067040,038610,05 Algeria 7970, ,04 Tunisia7580, ,04 Sub-total NA5.8650, , ,24 Total MENA , , ,04 Total Asia , , ,62 Total World MENA Region Insurance Sector in GeneralInsurance Sector in General

7 MENA Region Insurance Sector in General  GCC witnessed a record premium growth rate in past few years with a solid future outlook 7

MENA Region Insurance Sector in General  Slower growth in life and non-life premiums when compared to S.Arabia33,8%27,1% Oman15,8%26,0% Egypt12,1%28,1% Jordan8,6%14,1% Lebanon8,1%15,7% U.A.E.2,8%25,2% Morocco1,4%17,9% Iran0,3%16,4% Bahrain-0,7%33,5% Tunisia-3,0%12,6% Qatar-8,7%44,0% Algeria-24,1%35,4% Kuwait-31,9%14,8% Average MENA4,4%22,3% Average GCC8,8%25,1% Average WORLD-3,7%2,2%

 Liability Insurance  Premiums classified as liability make up about 2.7% of the non-life account with 2009 premiums of just under USD 28 mio in Algeria  In Lebanon, liability account grew by 12.5% in 2008 and the incurred loss ratio realised as 27.3%  In Libya market liability account grew by 42.75% in 2009 to reach a total gross premium income of USD 19.5 mio. The paid L/R of the account in 2009 was 12%  The gross market incurred loss ratio in 2008 regarding the liability classes was 10.34% for Bahrain 9 MENA Region Insurance Sector in General

 Islamic Insurance – Takaful Market by Region 10 MENA Region Insurance Sector in General 2008 $9,4 billion 2004 $3,9 billion

11 MENA Region Insurance Sector in General  Islamic Insurance – Takaful Market by Line of Business in 2008 (%)

 Introduction of compulsory insurances like motor and health  Financial Centers  Dubai International Financial Centre  Qatar Financial Centre  Central Bank of Bahrain  Calls for consolidation across the region’s fragmented and highly competitive markets 12 MENA Region Insurance Sector in General

13  Increase in the frequency of cat losses in the last 5 years Cyclone GONU – June 2007 Economic Loss: USD 3,2 billion Insured Loss : USD 1 billion Cyclone PHET – June 2009 Economic Loss: USD 776 millin Insured Loss : USD 200 million Floods in JEDDAH – November 2009 Economic Loss : USD 930 million Insured Loss : USD 200 million 13 MENA Region Insurance Sector in General

 Dominance of Proportional Treaties.  Small XL business.  Low retention levels.  High dependence on reinsurance (in some cases 80%-90% of business reinsured)  Relatively high commission rates. 14 MENA Region Reinsurance Practices

 Minimal impact of financial crisis on reinsurance pricing in GCC.  Despite the global crisis, the region has not faced any capacity problems.  No significant changes in proportional treaty terms and conditions.  Limitations to Fac. Inward Acceptances.  Imposition or widening of loss corridors. 15 MENA Region 2010 Renewals

 Flat rates in non-proportional treaties / slight decreases in loss-free layers in Middle-East.  Reduction in EPI figures.  Diversification in the panel of reinsurers in Northern African Markets. 16 MENA Region 2010 Renewals

BranchPremium Insurance Density Insurance Penetration Non-Life$ $210,6% ALGERIA Population: GDP : $130 billion GDP per capita: $ Inflation rate : 5,4 % Growth rate: 2 % Insurance premium: $ 797 million Number of companies:16 (7government, 7 private, 2 mutual) 17 MENA Region TRENDS / OPPORTUNITIES

Algeria Insurance Market Review  Domination of state owned insurance companies  Compulsory insurance against catastrophes  Gold Mines: Personal Liability and Life Insurance  Public Investment Programme 18 MENA Region TRENDS / OPPORTUNITIES

BranchPremium Insurance Density Insurance Penetration Non-Life$357,000,000$446,31,6% BAHRAIN Population: GDP : $ 22 billion GDP per capita: $ Inflation rate : 2,8% Growth rate: 2,2% Insurance premium: $ 494 million Number of companies: The role of the Bahrain Financial Harbour. Opportunities on the health side. MENA Region TRENDS / OPPORTUNITIES

EGYPT Population: 83 million GDP : $ 188 billion GDP per capita: $ Inflation rate : 16,2% Growth rate: 4,7% Insurance premium: $ million Number of companies: 26 BranchPremium Insurance Density Insurance Penetration Non-Life$ $10,40,5% 20 MENA Region TRENDS / OPPORTUNITIES

Egypt Insurance Market Review  Regulatory changes  The first stage of reforms ( )  The second stage of reforms ( ) 21 MENA Region TRENDS / OPPORTUNITIES

BranchPremium Insurance Density Insurance Penetration Non-Life$4,091,000,000$55,1%1,1 IRAN Population: GDP : $ 369 billion GDP per capita : $ Inflation rate : 12,2% Insurance Premium: $ million Growth rate: 0,9% Number of companies: MENA Region TRENDS / OPPORTUNITIES

Iran Insurance Market Review  Privatisation law.  A new draft of the Insurance Overhaul Plan.  Dominance of the state owned insurance companies.  Dominance of the XL Treaties versus Proportional Treaties. 23 MENA Region TRENDS / OPPORTUNITIES

BranchPremium Insurance Density Insurance Penetration Non-Life$ $141,10,9% SAUDI ARABIA Population: GDP : $ 390 billion GDP per capita: $ Inflation rate : 5,1% Insurance premium: $3.896 million Growth rate: % 0,1 Number of companies: MENA Region TRENDS / OPPORTUNITIES

Saudi Arabia Insurance Market Review  Strong growth over the next five years.  Enforcement of compulsory health insurance.  Establishment of Saudi Re.  Young population and the overall growth of the financial sector. 25 MENA Region TRENDS / OPPORTUNITIES

BranchPremium Insurance Density Insurance Penetration Non-Life$773,000,000$548,60.8% QATAR Population: GDP :$ 93 billion GDP per capita :$ Inflation rate : -4,9% Growth rate: 9,5% Insurance premium: $ 773 million Number of companies: Efforts to encourage health insurance. The role of QFC (Qatar Financial Center) MENA Region TRENDS / OPPORTUNITIES

BranchPremium Insurance Density Insurance Penetration Non-Life$369,000,000$123,50,4% KUWAIT Population: GDP : $101 billion GDP per capita : $ Inflation rate : 3,9% Growth rate: 9,5% Insurance premium:$ 457 million Number of companies: MENA Region TRENDS / OPPORTUNITIES

Kuwait Insurance Market Review  85.5% of the market premium is written by the local companies.  More than 10 takaful companies.  Significant growth potential due to young population. 28 MENA Region TRENDS / OPPORTUNITIES

BranchPremium Insurance Density Insurance Penetration Non-Life$720,000,000$170,52,3% LEBANON Population: GDP : $ 31 billion GDP per capita :$ Inflation rate : 1,1% Growth rate: 6% Insurance premium: $ 952 million Number of companies: MENA Region TRENDS / OPPORTUNITIES

Lebanon Insurance Market Review  One of the largest Life Insurance Markets in MENA Region.  Efforts to be recognised as a regional hub.  A new pension plan.  Need of a new insurance law. 30 MENA Region TRENDS / OPPORTUNITIES

BranchPremium Insurance Density Insurance Penetration Non-Life$4,381,000,000$952,72,1% U.A.E Population: GDP : $ 205 billion GDP per capita: $ Inflation rate : 1,6% Insurance premium:$ million Growth rate: 1,3% Number of companies: MENA Region TRENDS / OPPORTUNITIES

U.A.E Insurance Market Review  Leader in GCC countries i.r.o premium production.  Disappointing absence of regulatory development.  Low rates, large losses. 32 MENA Region TRENDS / OPPORTUNITIES

BranchPremium Insurance Density Insurance Penetration Non-Life$525,000,000$187,51%1% OMAN Population: GDP :$ 53 billion GDP per capita : $ Inflation rate : 3,6% Growth rate: 3,7% Insurance premium: $ 627 million Number of companies: 16 (9 domestic, 7 foreign ) 33 MENA Region TRENDS / OPPORTUNITIES

Oman Insurance Market Review  The formation of Oman Re.  Orange Card  Medical Insurance offering vast potential. 34 MENA Region TRENDS / OPPORTUNITIES

BranchPremium Insurance Volume Insurance Penetration Ratio Non-Life $460,000,000$72,92,1% JORDAN Population: GDP : $ 22 billion GDP per capita : $ Inflation rate : -0,6% Growth rate: 2,1% Insurance premium: $ 510 million Number of companies: MENA Region TRENDS / OPPORTUNITIES

Jordan Insurance Market Review  New minimum capital requirement.  New instructions to regulate the bancassurance business.  Amendment on civil health insurance. 36 MENA Region TRENDS / OPPORTUNITIES

BranchPremium Insurance Density Insurance Penetration Non-Life$ $641,65% TUNISIA Population: GDP : $ 40 billion GDP per capita: $ Inflation rate : 3,7% Growth rate: 2,8% Insurance premium: $ 758 million Number of companies: 22 (18 domestic,4 foreign) 37 MENA Region TRENDS / OPPORTUNITIES

Tunisia Insurance Market Review  Partial privatisation of The Societe Tunisienne d’Assurances et de Reassurances (STAR).  Updated regulations.  Tunis Financial Harbour. 38 MENA Region TRENDS / OPPORTUNITIES

BranchPremium Insurance Density Insurance Penetration Non-Life$1,758,000,000$551,9% MOROCCO Population: 32,000,000 GDP : $ 91 billion GDP per capita: $ Inflation rate : 1,2% Growth rate: 5,3% Insurance premium: $ million Number of companies: MENA Region TRENDS / OPPORTUNITIES

Morocco Insurance Market Review  Leader in North Africa.  Free trade agreement with US.  Removal of obligatory cession for non-life business by  Launch of first risk management association. 40 MENA Region TRENDS / OPPORTUNITIES

THANK YOU FOR YOUR ATTENTION 41