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Mar
31
BNH Post Good Results, Looks to Gulf Expansion
Posted on Mar 31, 2011 by Sergio Ulloa (G+)
Bahrain National Holding (BNH), the parent company of both Bahrain National Insurance and Bahrain National Life Assurance, held its annual shareholder meeting at BNH Tower this past Tuesday, March 29th 2011. Despite the general political tension occurring in the region, BNH's progress has remained undeterred and the firm plans on continuing the expansion of its operations throughout the Gulf. BNH announced a net profit of BD 3.814 million (US$ 10.1 million) for 2010, which resulted in a 5 percent increase of the company' total net assets, now up to BD 42.157 million (US$ 112 million). There was also an increase in BNH's Net Earned Premium income which rose to BD 13.587 million (US$ 36 million) over the BD 13.395 million (US$ 35.5 million) registered in 2009. Given the positive results, a 20 percent dividend at 20 fils (US$ 0.50) per share was agreed upon and paid to shareholders from company earnings. Mahmood Al Soufi , chief executive of BNH, has said of the Group's performance: "We are content with our business strategies which have provided rewarding results in 2010. We will continue with these initiatives to ensure the stability of our business, to provide value for our clients and business partners and to grow our shareholders value," he later dismissed any possible spillover impact from events occurring in the Middle East or Japan having effect on the company's business "We are not revising our budgets and there has been no change in our investment plans regionally or our continued investment in our core insurance business." Given the stable forecast, BNH is looking to invest more on top of the BD 8 million (US$ 21.22 million) allotted in 2009 for regional expansion in an attempt at enhancing the scale of business available to the company. BNH is particularly keen on establishing a presence in the UAE and Qatari insurance markets. Mahmood Al Soufi explains the current status of BNH's regional development strategy: "We are in the final phases of establishing a company in Abu Dhabi with major shareholding from the UAE and also the company is positive to get nod from the Qatari authorities to open a branch in Doha." In October 2010, BNH established Bahrain Emirates Insurance Company (BEI), their first joint-venture branch in Abu Dhabi. BNH holds a 30 percent stake in the business with an initial paid-up capital investment of BD 10.5 million (US$ 27.9 million). BEI was successfully granted a license to operate in the country and business in Abu Dhabi is expected to progress quickly given the industry expertise available from its investors. The insurance market in the UAE, which incorporates compulsory private health insurance scheme, has significant growth potential for insurers. BEI is expected to expand its operations further throughout the UAE and other Gulf countries. BNH is presently waiting on the Qatar Financial Centre Regulatory Authority to grant them a license to operate a subdivision in Doha. Qatar is currently developing a national health insurance scheme as part of substantial reforms planned for the healthcare sector in their National Development Strategy 2011-2016. The system would establish a public-private mix whereby a new federal authority would negotiate closely with private insurers over provision of services. A complimentary basic health service package would be introduced but all those able to pay (including expatriates) would be expected to enter the private insurance market. While the full ramifications of these new national regulations can not yet be evaluated, early entrance into the Qatari insurance market for BNH would be an advantage. Takaful, or Sharia-compliant, insurance has emerged as a powerful niche securities market in the region. Takaful products are mutually beneficial coverage policies that cater specifically to Middle Eastern and Asian Islamic communities. The takaful insurance industry is projected by industry analysts to grow at 15 percent annually over the next 5 years and generate more than US$7 billion in premium income. Major foreign insurers have taken note of the huge growth potential from this brand of products. In 2010, Standard Chartered and Allianz Takaful in Qatar entered into a 5 year agreement to distribute Alliaz Takaful's insurance services through Standard Chartered Bank. The two insurers partnered again to allow Standard Chartered SME insurance products to be sold through Allianz Takaful in Bahrain. Zurich established a joint venture operation with Abu Dhabi National Takaful and is looking to involve itself further in the region. BNH are likewise interested at getting into the takaful market and predicted they would be involved with acquisitions involving the Islamic insurance industry within the year. Farouk Almoayyed, Chairman of the BNH, summarized the firm's situation and predicted upward trajectory for the company: "The proactive approach the Group implemented previously has manifested itself in the positive financials achieved for this year. We strongly believe in our experienced team and effective strategies and are confident to say that today we are well positioned to sustain our growth organically, regionally and internationally." The general outlook for the insurance industry in the Middle East and Gulf regions is currently difficult to determine. Prior to the civil unrest and political revolutions in Tunisia, Egypt and Libya, the forecast was very positive throughout. The preexisting low insurance penetration levels, high growth rate in population and emerging economies were all conducive to growth. The degree of increased risk now varies much more from country to country. The three most lucrative markets in the region, UAE, Qatar, and Saudi Arabia, have remained strong with renewed commitment to health infrastructure encouraging further demand for insurance services. Areas under more duress are more likely to suffer from disruption to business activity as well as liquidity issues. The degree to which the current political turmoil will spill over into the economy and become a more substantial long term issue in many Middle Eastern countries is still evolving. Insurance Companies Mentioned Bahrain National Holding
BNH, with its subsidiaries, offers a wide range of insurance and risk management solutions in Bahrain. The Company was established in 1998 and is based in Manama, Bahrain.
Allianz Takaful
A fully owned subsidiary of the Allianz Group, Allianz Takaful was established in March 2009 and is headquartered in Bahrain. Allianz Takaful is the Allianz group's first foray into the Gulf Cooperation Council or GCC, and offers Shariah-compliant products and services.
Standard Chartered Bank Qatar
Standard Chartered Bank first opened a branch office in Qatar in 1950, making it the oldest foreign bank in Qatar. It operates 3 branches and 6 ATM machines in the country, employing 167 employees from 30 different countries. Their two core divisions of Wholesale and Consumer Banking have given them a 27% market share in Qatar.
Zurich
Headquartered in Zurich, Switzerland, Zurich Financial Services Group is an insurance-based financial services provider with a network of subsidiaries andoffices in North America and Europe and also in Asia-Pacific, Latin America and other markets. Zurich is one of the world's largest insurance groups, and one of the few to operate on a truly global basis. With 60,000 employees serving customers in more than 170 countries, our business is concentrated in three business segments: General Insurance, Global Life, and Farmers.