SPREADING THE RISK

Kuwait 2017 | FINANCE | INTERVIEW

TBY talks to Dawoud S. Al Duwaisan, CEO of Kuwait Reinsurance Co. (Kuwait Re), on the company's expansion, the sector's regulation, and market expectations.

Dawoud S. Al Duwaisan
BIOGRAPHY
Dawoud S. Al Duwaisan joined Kuwait Re in September 2016 as CEO. Prior to that, he worked with the Al Ahleia Insurance Company-Kuwait as Deputy CEO-Technical Insurance Depts. Al Duwaisan has 20 years’ experience in the insurance industry. He holds a bachelor’s degree in electrical engineering from the University of Arizona and an MBA from Maastricht Business School.

What is driving your geographic advancement throughout MENA, Central and Eastern Europe, and Asia Pacific?

Reinsurance, by nature, is more diversified than any other financial industry, which is why it is important to spread the risks. The portfolio of Kuwait Re is currently split between 27% in MENA, 24% in Asia, and around 49% Europe and rest of the world. We have an office in Malaysia, which leads the Islamic financial sector, and we are planning to open an office in Africa in the near future. For the MENA region, we have the competitive advantage of locality, and because we are close to our clients here, knowing the market well means we can provide flexible rates. However, the reinsurance market is open and competitive, because direct insurance operators can seek assistance from any international reinsurance company.

The global takaful market is estimated at USD20 billion and expected to reach as high as USD34 billion by 2019. Are you looking to expand in the re-takaful segment?

We do it from Kuwait, but the center of our re-takaful operations is in Malaysia. The takaful market is growing, and as a consequence, there is growing demand for re-takaful. Nevertheless, it is by no means as large as the traditional reinsurance sector. The capacity is limited in that sector, and we are capitalizing on any opportunities that arise.

Does the insurance market of Kuwait require a regulator?

Kuwait lacks a regulatory framework for the insurance industry, while other GCC countries have taken advanced steps in this direction. Similar to the banking sector, also in the insurance industry, the assets of clients should be safeguarded. Unfortunately, this has been overlooked by the government, and the last regulation was passed in 1961. As a result, the market is self-regulated; companies regulate themselves in terms of conditions and price. With regulation comes healthy competition, so I welcome that. The Ministry of Commerce officially functions as the regulator. The industry has advanced in the past five decades, and insurance is now a protection for properties, other assets, trades, and businesses. There is no proper checking of the solvency and capital adequacy of insurance companies in Kuwait, whereas, Saudi Arabia, Dubai, Bahrain, and to a certain good level Qatar now have a highly regulated insurance industry. In the reinsurance sector, they encourage the retention of premiums inside the country, which we do not have in Kuwait. Any international contractor can come here and bring in a reinsurance company and all the money goes out of the country. We, as a local company, ensure that the money stays in Kuwait. We do not have to invent new regulations; we can use the example from other CGG countries, which have similar economic models, and adapt the regulations to fit the specific needs of Kuwait. In countries that implemented regulations, in Saudi Arabia in Dubai, insurance companies' profits have increased substantially, solvency ratios have been improved, jobs have been created, and assets of clients are more well safeguarded. These companies are in a better position to grow internationally and become a new driver of the economy

What are your expectations for the insurance and reinsurance market?

Oil prices have been putting pressure on economic growth in GCC countries and there is an excess of capital that is pouring into the industry to find better investment returns. This decreases the prices of insurance services and ultimately leads to lower margins on the operating side. Consequently, the insurance industry has to look for different and better opportunities. Companies have to be creative and keep their eyes open for any emerging opportunity. We envision being a leading reinsurance provider in the GCC, and we have the ambition to capitalize on emerging opportunities elsewhere, for example in Africa and Asia. We continue focusing on our core business: facultative and traditional proportional and non-proportional treaties for direct insurance.