CFCA roundtable: Regional reinsurance in Africa

CFCA roundtable: Regional reinsurance in Africa

Africa’s emerging insurance market is tough as well as diverse, but the role of reinsurance will be vital in its development, senior executives advocated, speaking at a Reactions roundtable held in association with the Casablanca Finance City Authority (CFCA) in Monte Carlo.

“Reinsurance is the backbone for the developing African financial industry. With such rapid development, innovative methods and a proper insurance infrastructure are needed to manage the associated risks,” said Said Ibrahimi, chief executive of the CFCA. 

“The stronger this backbone becomes, the more our citizens and investors will trust the markets. 

"This trust will encourage them to invest into the market, creating more market efficiency and liquidity.”

Clearly, the growth prospects across Africa are substantial and since this is so highly correlated with insurance penetration, the sector is expected to develop rapidly over the next few decades.

Africa’s continued emergence will largely depend on the development of hubs for reinsurance business within the region. 

In this respect, Africa looks to thriving examples in Singapore, Shanghai or Dubai for inspiration.Monte Carlo roundtable Africa

“Reinsurance has boomed in a number of emerging markets, namely in Singapore, the Middle East, and Brazil, and certain lessons from their development can be applied to establishing a strong reinsurance environment in Africa,” said Najwa El Iraki, head of business development at CFCA. 

"The key to understanding Africa’s re/insurance markets is an appreciation that you simply can’t lump these diverse and complex markets together,” said Brendan Plessis, head of emerging markets at XL Catlin. 

“If we consider those hubs which have, and are, in the process of establishing themselves as real players in the global re/insurance market, clearly an efficient and fit for purpose regulatory environment is key,” he added.

Morocco’s Casablanca Financial Centre is vying to welcome reinsurance business within the region, as a business-friendly crossroads with Europe, the Middle East, and a gateway into Africa, specifically the largely Francophone markets of Greater North West Africa.

About 80 international companies have joined CFC over the past 3 years. Insurance sector examples include AIG, Trust Re, International General Insurance, Chedid Re, Euler Hermes, Coface, Ascoma and Saham Assurances. 

PartnerRe also entered into a partnership with Moroccan insurer Mamda and French reinsurer MCR to establish Mamda Re in the CFC, a new reinsurance company dedicated to agricultural risk in Africa.

“Most reinsurers set up offices in reinsurance hubs due to favourable regulatory and tax structures,” said Ibrahimi. 

“Morocco is able to offer this and more. It is a very politically stable country and is in one of the most strategic geographic business locations in the world. It is at the crossroads of Europe and Africa and has a cultural connection with the Middle East.”

“However, there are a number of challenges that need to be addressed in order to promote the proper functioning of our reinsurance industry. 

"Insuring the large infrastructure projects, especially cross-border projects, will require access to more capital. CFC understands that an advanced regulatory framework is needed to ensure a proper business environment for the investment into these economies,” added Ibrahimi.

Nurturing re/insurance talent is another aspect necessary to develop. In this respect, the role of established players in existing market hubs is going to be important. Stronger capital foundations will also help the market.

“CFC recognises that greater availability of experienced professionals will be important in ultimately strengthening margins for reinsurers. Local initiatives should be implemented to nurture the development of local professionals. 

"This is why we are collaborating with such institutions as the Chartered Insurance Institute to provide training programs and certifications to improve the local talent to that of global standards”, said El Iraki.

“In particular, companies are in need of actuarial, risk management and specialised underwriting skills to support their development,” said Nick Charteris-Black, of AM Best. 

Participants:

• David Benyon, editor, Reactions

• Said Ibrahimi, CEO, CFCA

• Najwa El Iraki, head of business development, CFCA

• Pierre-Edouard Fraigneau, director, North Africa, AIG

• Thierry van Santen, CEO, Allianz Global Corporate & Specialty France

• Nick Charteris-Black, managing director, market development EMEA, AM Best

• Ahmed Rajab, CEO, MENA, Aon Benfield

• Farid Chedid, chairman & CEO, Chedid Re

• Richard Hewitt, head of business intelligence, EMEA, Guy Carpenter

• Wasef Jabsheh, vice chairman & CEO, IGI Insurance

• Vincent Vandendael, director, global markets, Lloyd’s

• Mehdi Tazi, CEO, Saham Assurance Maroc

• Frank O’Neill, CEO, MEA, Swiss Re

• Mounir Kabban, president, United Insurance Brokers

• Brendan Plessis, head of emerging markets, XL Catlin


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