Aug. 25, 2015


Abbas Al-Brahim

Saudi Arabia

Abbas Al-Brahim

Chairman, Chedid Re Saudi Arabia

TBY talks to Abbas Al-Brahim, Chairman of Chedid Re Saudi Arabia, on mergers, attracting qualified employees, and the effects of the greater economy on the insurance sector.

BIO

Before joining the Rashed Al Rashed Group, Abbas Al-Brahim was a banker for a French bank for 25 years. After exiting the banking sector, Al-Brahim entered the plastics industry at the executive level, turning a losing company into a profit-maker. Al-Brahim joined Rashed Al Rashed Group as a consultant before representing the owners at the Chairman, Vice Chairman, and board member levels.

Is the current market large enough to sustain the 35 insurance companies, and what is your outlook regarding mergers and acquisitions?

Some of the 35 companies have already suffered losses, because the major business available in the market is either medical or motor fleets where usually profit margins are thin. The major business of the country is oil and gas, and this should be the main target for insurance companies, for decades we have been dependent upon international firms to handle this business, and it will take time for the Saudi market to be able to set up firms that are sizable enough with expertise and knowledge to be able to take on such large accounts with sizable retentions. Regarding mergers and acquisitions, companies will have to do this if they want to survive and continue onward. Perhaps a merger between those that are suffering should be enforced, because now the stake is limited and everybody is chasing the same piece of cake and due to size differences, economies of scale are not in favor of the smaller insurance players. Medical for example, has gone through phases, and is constantly improving. The government will eventually move from fully subsidizing the health sector to asking insurance companies for medical coverage, this will also open up more business for insurance companies. Despite the size of motor premiums in the market, there remain growth opportunities within motor insurance where coverage is still below potential. As for other lines of business, several compulsory lines are currently being reviewed by SAMA, the regulator, and they are not wasting any efforts in enhancing the sector.

Chedid Re has made significant progress in the market since its entry five years ago. Where do you hope to see the company over the next five years?

The sky is the limit for us we have the expertise, talent , commitment, and devotion, to do the extra mile for our clients. We are committed to a full fledged operation in the Kingdom. With time we are hoping to attract more qualified Saudis into the insurance business and/or continuing our internal trainings. Do not forget that this sector is fairly new to the country, and so we hope that with time there will be more universities in the Kingdom that offer insurance studies and specialize in this area, which will grow over time the number of Saudis in the sector.

What is your outlook for the remainder of 2015?

We cannot hide the fact that the drop in oil prices is going to slightly impact, and maybe slowdown growth. However, as our King declared recently, the government will continue to support major infrastructure projects from the huge reserves that the government has, and we hope that oil goes back to the levels that are beneficial to both sides. Gradually, Saudi Arabia is trying to move away from being totally dependent upon oil revenue, which is why the government is encouraging foreign investment in different industries. We have seen that there is a focus on setting up high-quality industrial zones and industrial cities across the country; however, this will take time. Eventually, the country will be really diversifying revenues outside of the oil sector.