Morocco’s insurance sector records robust growth


CREDIT expansion and growing awareness yielded robust growth across Morocco’s insurance market, with life and savings products in particular posting strong performances in the first half of 2015.
While the domestic insurance market continues to provide steady returns, Moroccan institutions are also building up their networks in sub-Saharan Africa, where low penetration rates and rapid economic development signal formidable growth prospects.
Thanks to the expansion efforts of recent years, Moroccan insurers have emerged as major players on the continent and, according to recent rankings by Jeune Afrique magazine, now account for five of the top-15 insurers on the continent by premiums written.
Moroccan insurance premiums continued to grow in the first half of 2015, according to data released in late September by industry representative body, the Moroccan Federation of Insurance and Reinsurance Companies (Federation Marocaine des Sociétés d’Assurances et de Réassurance, FMSAR).
Industry turnover reached Dh16.78bn (€1.6bn) over the period, marking a 6.3 percent year-on-year (y-o-y) increase and up slightly over the 6 percent compound annual growth rate registered since 2008.
The expansion was driven by notable growth in life and savings products, which saw premiums for the period rise by 13.9 percent y-o-y to Dh5.24bn (€486.5m), according to FMSAR data. While the segment accounts for nearly one-third (31.2 percent) of industry turnover, the insurance market is widely seen as moving in this direction.
‘Strong life insurance growth is being driven in part by short-term economic factors, including growth in property lending and consumer credit – both of which help to boost sales in the segment,’ Ali Harraj, CEO of Morocco’s largest insurer by domestic premiums, Wafa Assurance, told the Oxford Business Group (OBG).
He added that long-term factors, including rising awareness about savings products like retirement plans and economic uncertainty in the wake of the global crisis were also helping to develop the segment.
Individual life insurance products, which already dominate the segment, were the main drivers of the expansion, rising 19.7 percent y-o-y to Dh3bn (€278m). Meanwhile, group life insurance sales contracted by 2 percent to Dh1.1bn (€102.7m) after posting 13.2 percent growth last year. Savings product sales also saw a strong increase, up 18.9 percent at Dh906.1m (€84.2m).
In the non-life segment, motor insurance ranked as the largest line by premiums, accounting for 32.6 percent of total industry sales. The segment’s growth was slightly below that of the broader market, rising by 5.1 percent to reach Dh5.47bn (€508.6m). Most other major non-life lines, however, registered a weaker performance over the period, including transport premiums, which contracted by 8.5 percent to Dh300m (€27.9m).
While the domestic insurance market in Morocco still offers room for growth, particularly when compared to more mature markets, the country already has one of the highest insurance penetration rates in the Arab world, behind only Lebanon with 3.2 percent penetration as a percentage of GDP last year, according to Swiss Re.
As a result, many local insurance companies have been able to build up a large capital base, in turn providing the opportunity to expand to markets in sub-Saharan Africa.
The benefits of doing so are sizeable, not only in terms of portfolio diversification, but also for group performance. On average, the African insurance market grew by some 10.2 percent in 2013, according to Swiss Re, compared to 2.5 percent average growth worldwide.
In September Saham Finances, which controls Morocco’s fourth-largest insurer, Saham Assurances, announced that it had acquired a 53.6 percent stake in Nigeria’s Continental Reinsurance, following the exit of regional private equity group Emerging Capital Partners.
With a population of 170 million and insurance penetration below 1 percent, Nigeria offers significant growth potential, according to Saham Assurances.
‘Nigeria has huge potential because of its population, low penetration rate and growing economy,’ Mehdi Tazi, CEO of Saham Assurances, told OBG.
The acquisition marks the company’s second investment in the country, after it acquired a 40 percent interest in Nigeria non-life firm Unitrust Insurance last year. Other acquisitions in Angola (2012), Kenya (2013) and Rwanda (2014) have extended Saham’s reach across the continent, bringing the number of African insurance and reinsurance businesses listed under its umbrella to 31.
Other major Moroccan insurance players are also actively expanding their footprint on the continent.
Harraj said Wafa, which already has operations in Tunisia, Senegal and Cameroon, is currently targeting some of the largest markets in the 14-member Inter-African Conference of Insurance Markets for expansion, including Côte d’Ivoire, Gabon and the Congo.
The firm plans to use the branch network of its sister company, Attijarawafa Bank – which is currently present in 23 markets – to sell its insurance products. Unlike other Moroccan insurers, which have largely relied on an acquisition-based approach, Wafa plans to develop its African network largely via greenfield investment. However, Harraj told OBG that the company’s long-term strategy could also see its subsidiaries acquire local competitors.


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