x Abu Dhabi, UAEThursday 23 November 2017

Eyeing global expansion Cigna acquires Zurich Insurance MidEast

Acquisiton grants it licenses in Oman, UAE, Lebanon and Kuwait

Jason Sadler, right, president of Cigna International Markets speaks as Arthur Cozad, left, CEO for Cigna Middle East Markets and Howard Gough CEO of Cigna for the MENA region listen on during a media roundtable at the Four Seasons Resort in the Jumeriah area of Dubai on July 11, 2017. Cigna announced they acquired Zurich Insurance Middle East. Christopher Pike / The National

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Jason Sadler, right, president of Cigna International Markets speaks as Arthur Cozad, left, CEO for Cigna Middle East Markets and Howard Gough CEO of Cigna for the MENA region listen on during a media roundtable at the Four Seasons Resort in the Jumeriah area of Dubai on July 11, 2017. Cigna announced they acquired Zurich Insurance Middle East. Christopher Pike / The National Job ID: Reporter: N/A Section: Business Keywords:

Cigna, one of the biggest US insurance companies, said yesterday it had acquired Zurich Insurance Middle East to grow its global footprint.

Cigna declined to give a value to the deal, which grants it licences in Oman, the UAE, Lebanon and Kuwait. The insurer, which has been focused on Asia, opened offices this year at the Dubai International Financial Centre, which serves as its regional headquarters.

“With this acquisition, Cigna will operate in the UAE, Lebanon, Kuwait and Oman, further complementing our existing capabilities in the Middle East where we deliver group health products and services to multinational companies, small businesses and family-owned enterprises,” said Jason Sadler, president of Cigna International Markets.

Cigna currently has direct operations and services in more than 30 markets around the world and has network coverage in more than 200 countries.

Last year, its international business accounted for $5.5 billion out of its total revenue of $39.7bn.

Mr Sadler declined to give figures for the Middle East region.

“Our business in the Middle East has historically performed very strongly and that is certainly the case over the last few years when we have achieved strong double digit growth,” said Mr Sadler. “While I can’t share details about market share, I can say we are confident that we can maintain this upward trajectory. We have set some ambitious year-on-year growth targets which we anticipate will help drive continued business growth.”

Swiss Zurich also declined to give the transaction value for selling its general insurance entity, but said it would continue to focus on life and commerical insurance in the region.

"The sale follows on from Zurich’s decision to close its general insurance business in the Middle East to new retail and small business customers announced at the end of November, 2015," the insurer said in a statement. "Zurich will continue to focus on life insurance and commercial insurance business in the region where we see attractive opportunities in the future."

To grow its presence in the region, France’s Axa bought a 21 per cent stake in the UAE insurer Green Crescent Insurance Company, with a focus on growing its life segment.

However, Cigna, which is a health insurer, sees a “dynamic change within the healthcare sector”, said Mr Sadler.

In the Middle East and North Africa, growth of non-life premiums accelerated to 9.3 per cent last year from 6.3 per cent in 2015, according to Swiss Re.

The UAE, which is one of the bigger insurance markets in the region, has an overcrowded and fragmented industry, where more than 60 players in the market, split between 30 listed local insurers and the subsidiaries of foreign insurers, compete.

“Apart from a few exceptional cases, there have been no new insurance licenses issued in the recent past [in the UAE] and any foreign player wanting to enter the market has to buyout the licence from existing players,” said Sachin Sahni, a credit analyst at rating agency S&P Global Ratings.

The high incidence of diseases like diabetes, compulsory health insurance in certain markets such as the UAE and population growth have helped to drive growth in the medical sector in the region.

“While local insurance companies [in the UAE] are more focused on non-life insurance, foreign companies are more dominant on the life & savings products,” said Mr Sahni.

“Since the launch of compulsory medical insurance by Dubai Health Authority, medical has seen growth of more than 30 per cent in gross premiums. Prior to this, only medium to high-income expatriates were covered by insurance provided by their employers.”

Although the UAE insurance sector has been growing at an average 10 per cent annually in the past five years, growth will continue, but the source of growth will change from medical as the main contributor to a mix of medical, motor and property, according to S&P.

The UAE insurance market is still dominated by few big players. In 2016, the top five listed insurers accounted for 56 per cent of total listed market gross written premiums and they accounted for 82 per cent of consolidated net income, according to S&P.

The 29 UAE listed insurers in 2016 swung to a combined net income of Dh906 million compared with a net loss of Dh154m in 2015, thanks mainly to growth in investment income, according to S&P.