Insuring growth

In coversation with Fateh Bekdache, general manager of AROPE Insurance

E   Can you confirm data suggesting that AROPE Insurance maintains a leading role in underwriting comprehensive motor insurance, meaning insurance that covers the risks of owning and operating a car?

Yes, and we are the most profitable company among composite insurers which provide both life and non-life insurance, as per the 2014 Annual Report published by the Insurance Control Commission (ICC) on the Lebanese insurance sector.

E   Would you update us on the company’s results for 2015?

If we talk about consolidated figures, we had $109 million in gross premiums with $19 million in profits. Our shareholders’ equity stood at $126 million. The group is healthy.

E   Did you see any particular changes in your market share?

We can’t tell yet, but I think that we are still leaders in motor insurance and one of the major players in life insurance. Our business is growing across the board, despite what is going on around us. There were some impacts that we had to adjust to in 2015, such as the central bank circulars that mandated borrowers to put down 25 percent of any loan as well as the premium [of insurance related to the loan]. This led to a small regression in our life insurance portfolio but this will be better over the years to come, because the business is now more sustainable.

E   Banks also now have to offer loan customers a choice of five providers for the insurance that secures their loans. How did this innovation impact you?

This is a good thing. Banks have to offer more choices to their clients and for us at AROPE it was a win-win situation, because while other insurance companies are on the list [at our parent bank, BLOM] we are on the lists of other banks.

E   In its recent annual report for 2014, the ICC showed separate but very similar underwriting results for compulsory motor insurance in the two coverage areas of bodily injury, which has been imposed since the early 2000s, and material damages, which is quite new as a requirement under the 2013 traffic law. Are the growth rates aligning?

As you know, the only cover that was compulsory was for bodily injury. One of the articles in the new traffic law mentioned two years ago that insurance against material damages was required and we started to finalize this but there was no decision to go ahead with implementation.

E   So it is still not enforced?

No; all relevant decrees have not yet been issued.

E   You are bank-owned. Is the expansion into other countries driven by BLOM Bank?

As you know, we are in Egypt with life and non-life insurance. We usually follow in BLOM’s footsteps.

E   Apart from risks such as the currency risk, the Egyptian market has a large share of local insurers. How does this work for you?

What you are saying is 100 percent right but to look at it from the other side, before we arrived, there were companies in the market [which invested in Egypt]. Our penetration is good, there is a problem with monopolistic and big properties, which is not our cup of tea. Our strategy is to go toward personal lines – such as life insurance, medical, personal accident, all these policies which we love to sell. And we follow BLOM’s footsteps and we go after their customers.

I think we are still leaders in motor insurance and one of the major players in life insurance. Our business is growing across the board, despite what is going on around us.

E   Would AROPE aim to become more of a regional company in its profile? Do you have a strategic aim on how much of your business should be generated outside of Lebanon?

We were aiming to have a company that is bigger than the one we have in Lebanon when we entered Egypt. Our business plan was based on personal lines and bancassurance and when the government changed, the central bank stopped bancassurance agreements and it wasn’t until 2014, a year and half ago, that they issued a decree on how to do bancassurance. We applied and waited for the approvals and if I’m not wrong, we started selling the bancassurance [in Egypt] by the end of 2014.

E   Do you have a current target on how much of your revenue you want to generate outside by 2020?

If you asked me this question in 2010, it would have been much easier to answer. It is no secret that we had a lot of ambitions. Now, with everything that is happening around us, you have to be very careful. Play it by ear.

E   We talked some years ago about the role of insurance regulators and the need for a unified MENA market to make it easier to do intra-regional activities. Is this happening?

I can tell you that things are much better now in Lebanon [as far as dealing with regulators], because things are run very smoothly and we have new instructions every few days, which is good as long as they are good instructions.

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years.

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