The Business Year

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Ricardo M. Sleiman

Chairman, Fidelity

We are among the alpha companies—number six or seven—which is why we need to be very competitive. There are over 50 insurance companies in Lebanon, which is a lot in a country like this. This requires some lobbying at the Ministry of Economy to create an incentive for a merger approach that will help companies increase their capitalization and reduce the number of players in this small market. Currently, we have companies that are small and need to merge with bigger ones. They have built a good amount of trust among the Lebanese public; people insure their cars because it is obligatory and they buy health insurance coverage because they are scared of the fat hospital bill that they could end up with. Life insurance is improving little by little; things will be more aggressive in the coming two to three years. Our general insurance business has also improved, as have our medical premiums. We are expecting at least 15% growth in all lines during 2013.

Assad G. Mirza

Chairman, Capital Insurance

I think that, in the Middle East, Lebanon is one of the best environments. The problem we face today is economic due to negative events in the region, and not just in Syria. Today in particular, there is a crisis in tourism; some hotels even closed in June, and very few people are travelling to Lebanon. Those arriving ultimately return to their countries, and this naturally impacts the insurance sector. When you have money in a country, much more works. The restaurants are full, the hotels are occupied, and in turn the economy flourishes. Today’s climate in Lebanon is somewhat of a vicious circle and is a key problem that we face. There are over 50 insurance companies in Lebanon, which makes it a saturated market in need of consolidation. A merger law was passed in 1999 as a result of which three companies combined to form Capital Insurance. Today, I am a shareholder. I had formerly owned the company pre-merger with BBAC bank, and today it is a much improved commercial entity. In my view, further legislation should be introduced to promulgate consolidation of the sector leaving just half of the current number of companies competing in it.

Elie Nasnas

General Manager, Elie Nasnas

We are part of the Mediterranean region for AXA, and the company is present in Spain, Portugal, Italy, Greece, Turkey, Algeria, Morocco, Lebanon, and the Gulf. The Lebanese AXA entity is probably the smallest in the region, but I see it as an entry point to the area. The biggest challenge we face is to implement new legislation. The current laws are outdated and should be amended. Ideally, this could be done through a dialogue between the regulator and the boards of the companies so as to modernize the system. The government worked on a draft in 2007, but it did not make it to parliament. The sector is now considering a new draft law. However, the minimum capital requirement is too low. In the insurance business, we follow the solvency margin, which is an important key performance indicator (KPI). There are over 50 companies operating in the sector, three or four of which are reinsurance companies. There are approximately five to eight companies that only deal with life insurance, and the top 10 companies control around 75% of the market. The market is too concentrated, and there seems to be a lack of mergers and ways of dealing with the saturation.

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