Axa, the French insurance multinational, and its local partner plan to take a stake in the UAE insurer Green Crescent Insurance Company (GCIC), marking the first sign of a shake-up in the crowded insurance market.
Under the deal, Axa and Kanoo Group would be the primary investors of a capital increase in GCIC of Dh100 million through a convertible bond instrument. The move would raise GCIC’s paid-in capital to Dh200m upon conversion. The investment is subject to shareholder and regulatory approval.
Axa declined to reveal the size of the stake under discussion.
“The linkage of GCIC’s extensive local market knowledge and technical experience with Axa’s deep industry expertise and capabilities represent a unique opportunity for GCIC to expand our product offering and market share,” said the GCIC chairman Sheikh Saeed bin Hamdan Al Nahyan, announcing the proposed investment.
“The proposed deal is expected to provide significant value creation for shareholders, enabling GCIC to further penetrate the UAE health segment while leveraging our life licence to provide further growth in premiums and margins.”
The proposed investment is a long-awaited sign of consolidation in the hotly competitive local insurance sector after years of some insurers offering premiums at below the real cost.
This month, GCIC announced the chief executive Hazem Al Madi had resigned and would leave on Friday. Mr Al Madi helped to steer the company through a restructuring after losses that in late 2012 led to shareholders meeting to decide whether to dissolve GCIC. They voted to keep the business going by cutting its capital by more than half to Dh100m.
Jerome Droesch, the chief executive of Axa Gulf, said the deal would allow the company to capture a slice of the UAE’s life insurance sector. Axa is currently the largest non-life international insurer in the Arabian Gulf, with a footprint covering health, motor and travel insurance. But it does not yet hold a licence to operate within the UAE non-life sector, which is growing at an estimated annual pace of 27 per cent.
Founded in 2008, Abu Dhabi-based GCIC specialises in health and life insurance.
“Currently, we have got a significant market share in the medical and other non-life segments. Customers now require more all inclusive solutions embedding life insurance products,” said Mr Droesch.
“This new partnership will allow us to provide full comprehensive solutions for our customers in the UAE, leveraging Axa’s brand and knowledge within life insurance and the local market knowledge of Green Crescent Insurance Company.”
Axa, Europe’s second-largest insurance group, said last week it was eyeing more acquisitions in emerging markets after posting a 14 per cent rise in full-year net income. It has been snapping up companies from China to Colombia to help to offset sluggish growth in Europe and the United States.
GCIC will hold an extraordinary shareholder meeting on March 26, where shareholders will decide whether to agree to Axa’s deal.
Better access to medical care and an ageing population have been pushing up the frequency of UAE healthcare insurance claims in recent years. As a result, the bottom lines of many insurers have been strained.
Fareed Lutfi, the secretary general of the Emirates Insurance Association, said he expected further shake-ups in an industry still crowded with smaller brokers despite rising costs of 10 to 15 per cent annually.
“We need more consolidation but we cannot force it by law,” he said.
“Bigger companies are overcapitalised but smaller ones are still undercapitalised. The thinking has to change and more focus is needed on the bottom line.”
GCIC’s stock finished 2.19 per cent higher yesterday at Dh1.40 per cent. The company’s share price has more than tripled since the end of 2012.
tarnold@thenational.ae
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Four-day collections of TOH
Day Indian Rs (Dh)
Thursday 500.75 million (25.23m)
Friday 280.25m (14.12m)
Saturday 220.75m (11.21m)
Sunday 170.25m (8.58m)
Total 1.19bn (59.15m)
(Figures in millions, approximate)
The specs
Engine: 2.9-litre twin-turbo V6
Power: 540hp at 6,500rpm
Torque: 600Nm at 2,500rpm
Transmission: Eight-speed auto
Kerb weight: 1580kg
Price: From Dh750k
On sale: via special order
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Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
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Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
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The currency conundrum
Russ Mould, investment director at online trading platform AJ Bell, says almost every major currency has challenges right now. “The US has a huge budget deficit, the euro faces political friction and poor growth, sterling is bogged down by Brexit, China’s renminbi is hit by debt fears while slowing Chinese growth is hurting commodity exporters like Australia and Canada.”
Most countries now actively want a weak currency to make their exports more competitive. “China seems happy to let the renminbi drift lower, the Swiss are still running quantitative easing at full tilt and central bankers everywhere are actively talking down their currencies or offering only limited support," says Mr Mould.
This is a race to the bottom, and everybody wants to be a winner.
THE SPECS
Engine: Four-cylinder 2.5-litre
Transmission: Seven-speed auto
Power: 165hp
Torque: 241Nm
Price: Dh99,900 to Dh134,000
On sale: now
What is graphene?
Graphene is a single layer of carbon atoms arranged like honeycomb.
It was discovered in 2004, when Russian-born Manchester scientists Andrei Geim and Kostya Novoselov were "playing about" with sticky tape and graphite - the material used as "lead" in pencils.
Placing the tape on the graphite and peeling it, they managed to rip off thin flakes of carbon. In the beginning they got flakes consisting of many layers of graphene. But as they repeated the process many times, the flakes got thinner.
By separating the graphite fragments repeatedly, they managed to create flakes that were just one atom thick. Their experiment had led to graphene being isolated for the very first time.
At the time, many believed it was impossible for such thin crystalline materials to be stable. But examined under a microscope, the material remained stable, and when tested was found to have incredible properties.
It is many times times stronger than steel, yet incredibly lightweight and flexible. It is electrically and thermally conductive but also transparent. The world's first 2D material, it is one million times thinner than the diameter of a single human hair.
But the 'sticky tape' method would not work on an industrial scale. Since then, scientists have been working on manufacturing graphene, to make use of its incredible properties.
In 2010, Geim and Novoselov were awarded the Nobel Prize for Physics. Their discovery meant physicists could study a new class of two-dimensional materials with unique properties.
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Volunteers offer workers a lifeline
Community volunteers have swung into action delivering food packages and toiletries to the men.
When provisions are distributed, the men line up in long queues for packets of rice, flour, sugar, salt, pulses, milk, biscuits, shaving kits, soap and telecom cards.
Volunteers from St Mary’s Catholic Church said some workers came to the church to pray for their families and ask for assistance.
Boxes packed with essential food items were distributed to workers in the Dubai Investments Park and Ras Al Khaimah camps last week. Workers at the Sonapur camp asked for Dh1,600 towards their gas bill.
“Especially in this year of tolerance we consider ourselves privileged to be able to lend a helping hand to our needy brothers in the Actco camp," Father Lennie Connully, parish priest of St Mary’s.
Workers spoke of their helplessness, seeing children’s marriages cancelled because of lack of money going home. Others told of their misery of being unable to return home when a parent died.
“More than daily food, they are worried about not sending money home for their family,” said Kusum Dutta, a volunteer who works with the Indian consulate.
