Local insurance and Kuwait’s energy industry

Kuwait

Farid Saber, assistant group CEO of Gulf Insurance Group, talks to The Energy Year about the group’s key competitive advantages in the regional insurance market and the importance of the energy sector. Gulf Insurance Group is a public shareholding company dealing with private insurance, mainly in the MENA region.

How has the growth of Gulf Insurance Group evolved in the last few years?
We’ve been on a massive growth path for the last seven years. Since 2015-2016, the company has grown from USD 500 million to USD 2.7 billion in gross written premiums.
Some of that is due to organic growth. Our companies are growing, the markets are growing. We’re in emerging markets in different places, and insurance penetration is increasing in those markers. However, most of our growth comes from acquisitions. We have made a number of acquisitions in the last five years. We acquired the AIG operations in Turkey in 2017, as well as Takaful’s companies in Kuwait and Bahrain. Our largest acquisition has been that of the AXA’s gulf operations, valued at USD 475 million, which represents the largest insurance sector acquisition in the MENA region. This is the first time a local or regional company has been granted a massive international operation. We started the negotiations on this deal in March 2020, and we managed to close the deal in September 2021.

What has been the biggest challenge to come from the integration of the AXA operations into your business?
One of the key challenges was the different organisation models of the two companies. GIG operates on a decentralised model. We’re like a federation. We have a holding company, but each of our companies operate on their standalone basis, they have their own boards, their own management and very few links to the group in some key areas, like reinsurance, investments, capital management and risk management. Those are the areas where we hold on to the group. However, anything else related to business, product development and business development is done on the ground, in every subsidy.
AXA had the opposite. They’re a centralised hierarchy. They have product heads, function heads and more. It’s more of a strict pyramid. Their entity was in Bahrain and had branches in the UAE, Oman and Qatar. It’s more of a hierarchy with a branch model. That was one of the challenges, which turned into a great opportunity: trying to mix both together in a way where you can have them operate together.

What is the key competitive advantage of Gulf Insurance Group in the regional insurance market?
We believe we are number one in terms of diversity, geographical presence and capabilities. The good thing about GIG is that we managed to have a large market share in every single market we are in. There are different models here where you see a big company in one country having many branches, but 90% of their business comes from one. We managed to diversify our operations and revenue streams. We have the capabilities, the scale and the full-fledged operations everywhere, in each market.
We have publicly shared listed companies in every market. That’s the difference you see in large insurance groups like GIG, and it adds more value to the markets we are in. Today, if you look at the split, Kuwait represents around 36%. UAE is around 14%, Saudi Arabia is around 15%, Bahrain is 7%, Jordan is 5% and Turkey is 5%. Kuwait is still our base. It’s still our largest market. However, we’ve diversified our activities, and that gives us strength and potential for sustainable future growth.

How important is the energy sector for Gulf Insurance Group?
The energy sector is very important because we are an energy-producing region. If you look at Kuwait, the UAE, Saudi Arabia and Qatar, those are markets where we are actively playing a role on the insurance side, and they are energy-dependent. However, historically, large oil and gas companies are serviced by international players. Although we are present in all key energy-producing markets in the MENA region, our role – and we have to be clear about it – is restricted to some extent. There are highly specialised risks that require huge capacities. You need to line up maybe 10-15 reinsurers to be able to underwrite large-risk energy businesses. Those would be the 10 largest players in the world, with huge capacities.
However, the involvement of local companies is growing. There is more involvement happening from the local company side. However, today those large risks are still driven by the international markets. In Kuwait, for instance, we handle all the KPC employee benefits. We handle their staff, their medical health insurance.

What are the key pillars for growth for 2023 and beyond?
We are looking into the organic and the inorganic sources of growth for the company. In terms of organic growth, we have 6-7% projected growth for the next couple of years. In terms of inorganic growth, acquisition opportunities tend to be very opportunistic. We are looking at the Morocco market, as well as other countries. Our focus is on the MENA region. It is our goal to reinforce our position in all the markets where Gulf Insurance Group is present.

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