Zurich Middle East to focus on insurance, CEO says
Swiss insurer reaffirms commitment after selling unit to US health insurer Cigna
Swiss insurer Zurich will focus on growing its life and commercial business in the Middle East after selling its general insurance business to US health insurer Cigna, a company executive said yesterday.
“We in the Middle East want to be able to play in the areas of the market where we believe we can be competitive, where we can offer solutions that work for customers and work for the market and makes sense to Zurich as a group,” Walter Jopp, chief executive of Zurich Middle East said in an interview with The National. “Retail and general insurance was not something in the UAE and Middle East we wanted to continue offering.”
Cigna announced on Tuesday it had bought Zurich Insurance Middle East, gaining licences in Lebanon, Oman, the UAE and Kuwait as it seeks to grow its global footprint beyond Asia. Both Zurich and Cigna declined to disclose the transaction value.
Zurich sold one of its four legal entities to Cigna, implementing a policy adopted in 2015 to exit the general insurance business in the Middle East, which was concentrated in motor and home insurance, said Mr Jopp. The insurer plans to focus on the remaining segments of life and commercial insurance.
According to the UAE’s Insurance Authority, gross written premiums for life insurance in 2015 grew 9.8 per cent to Dh9.48 billion, a much slower pace than the 23 per cent growth seen in 2014 versus 2013. Foreign insurers accounted for about 80 per cent of life gross premiums in 2015.
Zurich has been overhauling its general insurance unit globally as part of plans of boosting profitability. Net first-quarter income after tax attributable to shareholders fell 31 per cent to US$607 million owning to a change in British reserving rates.
The insurer does not disclose figures for the Middle East. Its life business is in the UAE, Qatar and Bahrain and it also provides commercial insurance from its office in Dubai International Financial Centre.
Zurich Life is the Swiss company’s biggest money-earner in the region, offering products for life, critical illness and savings and investment. Its biggest market is the UAE.
Zurich is focusing on life insurance because of low penetration rates, estimated at around 1 per cent, he said.
“There are plenty of opportunities for growth,” said Mr Jopp. “Penetration rates are very low when you compare them to other markets in the Europe and North America or even parts of Asia.”
Still, Mr Jopp is optimistic about the growth prospects for life, including its fixed-term savings plans, which have been drubbed by consumers who complain about high fees.
To address consumers’ complaints, the Insurance Authority has published two drafts of regulation aimed at addressing some of their grievances, which it described as “alarming.”
Among the proposals, the IA plans to impose maximum limits on the indemnity commission advisers can earn, and ban them from recouping fees from the investment or insurance products they sell, which currently gives them an incentive to recommend those paying the highest fees.
Mr Jopp welcomed the new regulations.
“We think that’s a really good thing what the IA is doing and that the regulator is looking at the way that insurance products are sold and what sort of information is provided,” said Mr Jopp.
“We will adhere to the new regulatory regime.”
Updated: July 13, 2017 01:17 PM