BMI's Executive Summary

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The insurance sectors of Jordan and Lebanon are quite separate from each other, in spite of the two countries' close geographic proximity and modern histories that are dominated by the same issues. Nonetheless, they have a number of features in common. Taken together, these features set them apart from other countries in the region.

Arguably the most important feature is that, in absolute terms, they are small markets. Even if our assumptions about how the non-life and life segments change through 2007-2012 turn out to be very conservative, the absolute growth will be small. The present – and future – small scales of the insurance sectors of both Jordan and Lebanon go a long way to explaining why we do not see them as attractive markets. In both countries, the Insurance Business Environment Rating – a new feature for all our reports that is being introduced from Q108 – is quite low even by regional standards. As at the end of 2006, figures published by Lebanon's Ministry of Economy and Trade (and cited by the Association des Compagnies d'Assurance au Liban) showed that the total assets of that country's insurance sector amounted to US$1,555mn, of which US$829mn was held in investments. Figures published by the Jordan Insurance Federation (JOIF) showed that, for that country, the equivalent figures were US$765mn and US$571mn, respectively.

In respect of Jordan's life segment, the key issue is that premiums are so tiny that even with explosive growth in density per capita (which we do not expect) they will not amount to much in 2012. In Jordan's non-life segment, and both of the segments of Lebanon, the main problem is that we cannot see why the key growth drivers (non-life penetration and life density) will rise dramatically from current levels. In both countries, non-life insurance is already well established. This is in spite of the low per-capita income in Jordan (about US$2,500 per capita) and the well documented political/security problems in Lebanon. In both countries, non-life insurance has moved well beyond motor insurance. Medical insurance accounts for a significant portion of total non-life premiums in both, as the tables below show. The tables highlight another fact. Absolute growth of non-life premiums has been respectable and general in Jordan, but patchy in Lebanon. We assume that in both countries, but particularly Lebanon, competitive pressures limited premium growth in 2006. We see no reason why this should have changed in 2007.

If this assessment is correct, it can only be because of the peculiar competitive landscapes in both countries. Relative to almost all developing countries whose insurance sectors are surveyed by BMI, and indeed other countries in the Middle East, the insurance sectors of Jordan and Lebanon appear amazingly fragmented. Aside from AIG's ALICO in the life segments of both Jordan (definitely) and Lebanon (probably) there are, it seems, no insurance companies that have double digit market shares in any of the four main segments. The three major multi-national firms that are present are ALICO, AXA and Allianz; the vast majority of insurers are small operations which are owned by domestic business interests. However, we note that the similar competitive landscapes of the two countries can be interpreted positively. The regulatory environments have clearly been beneficial to the overall development of insurance in Jordan and Lebanon. Further, the regulators have not imposed substantial barriers to entry – whether to domestic or to foreign firms. More than in most countries, then, insurers in Jordan and Lebanon have – at least in theory – the opportunity to growth through acquisition.

The main way in which the two markets differ is in terms of sophistication, especially in life insurance. Life insurance is much better developed in Lebanon than in Jordan. This is almost certainly because percapita incomes in Lebanon are about three times what they are in Jordan and because Lebanon's sizeable non-Muslim minority does not have a cultural aversion to life insurance. Bancassurance (the distribution of long-term savings products through banks) is well understood in Lebanon, indeed, one of the leading local life insurers carries precisely that name. In Lebanon, several companies, such as MedGulf, Libano Suisse and Al-Ittihad Al-Wattani, have shown that they have the management resources to develop businesses in non-life and life insurance throughout other countries in the Middle East. In Jordan in particular, a number of smaller local companies carry names that imply that they are active in Islamic insurance (Takaful). While we appreciate that, globally, Takaful premiums are growing rapidly from a low base, we see little evidence that Takaful accounts for anything more than a tiny fraction of total premiums in Jordan and Lebanon.

Competitive Landscape for The Middle East and Africa Insurance
    Reports: Sample of Companies Ranked

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A cross-border overview of key players and their insurance market share across the Middle East and Africa. Tables and graphs show country presence of multinationals across the region. Comparative company analyses and rankings by premium income (life and non-life). Company SWOTS for leading life and non-life insurers, covering network of offices, presence of foreign stakeholders, strategic relationships, joint ventures; portfolio of clients; diversity of product range; profit growth, investment strategy and risk exposure.

Network of Insurance Sources

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BMI's Middle Eastern and African Insurance Reports are based on an extensive network of multilateral organisations, government departments, insurance industry associations, chambers of commerce and company reports. Information sources include:

Read about our other Insurance Reports