AL MASHREK insurance & reinsurance SAL is well known as one of the leading insurance companies in the Levant and North Africa for its presence and service for the past 35 years; it made many more achievements by expanding its presence to important destinations and recently it will inaugurate its new company in Egypt.
While lack of coverage is the region’s challenge, experts should compare patterns of those without insurance with factors like ethnicity and income hints at possible causes and effects.
Besides talent and work ethics, a key factor to George Abraham Matossian's accomplishment has been his durability throughout his young career.
After his education in the United States, George Matossian has long been recognized for his leadership in and advocacy of the insurance industry as he accompanied his famed father Abraham Matossian in the last 10 years. Since his return from the United States, he has seen many changes and witnessed remarkable fluctuations in the insurance industry. In addition to serving as General Manager & Vice President of Al Mashrek insurance & reinsurance SAL, George Matossian is well known throughout the country as an enterprising business man.
Although Al Mashrek is well known as one of the leading insurance companies in the Levant and North Africa for its presence and service for the past 35 years, it made many more achievements in expanding its presence to new destinations like recently it will inaugurate a new insurance company in Egypt.
Al Mashrek is more than a business venture; it is a continuation of a success story.
Following more than a decade of insurance experience, Matossian’s target is to expand Al Mashrek to important markets, where he can use his knowledge and experience for the benefit of the industry. He is also determined to go on with plans in a timely fashion.
“Being an insurer is not enough. Working to preserve the ideals of our profession, the opportunity for growth, the use of transparency to inform and enlighten clients in all ways, and serving clients when there is a claim are the most important contributions we can make as insurers. Our knowledge and judgment, honed with experience, continue to provide invaluable resources in a vast array of business lines. I give a lot of credit to our dedicated professional staff and count on them to kick off our operation in Egypt”, said Matossian.
BL: Lebanon was announced to be the fifth country in the region that showed growth in premiums despite the political instability, how did Lebanon achieve this remarkable rank?
Matossian: Lebanon has a lot of potential in all aspects of business including insurance. It’s quite normal as we have had this fluctuating situation for years. We are used to having turbulences every now and then, but due to the growth of people’s knowledge in insurance with time we are experiencing a normal yearly growth. Thus, it’s mainly the local citizens that are contributing to our industry. It’s true now that the premium is growing, but there’s a difficulty of collection in the market, so I believe that this coming year we may not experience the usual growth but I am looking forward for stability in the region to overcome this stage.
BL: Who are the people seeking the special insurance products?
Matossian: Firstly, I believe it’s the people who have big businesses. Secondly, it’s people who have a general knowledge of what insurance covers, and a lot of them also have lived and worked abroad where insurance is a must. Those are mostly the categories of people who buy those special risks. Our market is affected by bad advertisement or reputations. People consider that the insurance companies are sharks they are premium hungry but when it comes to claims they tend to be greedy, I believe it is very important to talk or publish the major claims paid by insurance companies, but it’s not yet the trend. Only claims above a million dollars are talked about or published, but I find that claims above 100,000 dollars should be included as they are quite big for the region and for Lebanon.
Another aspect that is affecting our market is the companies that work on mutual basis. Those companies are supposed to insure agricultural risks. Unfortunately, there is no control, they are insuring anyone anywhere and most of the bad reputation is coming from them, unfortunately they are not regulated by the Ministry of Economy. So, this stands in the hands of the government to make a move and spare us from this unfair competition and spare the government from this backdoor bearing in mind that mutual companies do not pay tax but we do. Consequently, we’re getting the bad reputation and the government is losing money, but I wonder when will somebody make the right move to get those mutual companies regulated and stop them from impacting the insurance sector in Lebanon.
BL: Did the Lebanese insurance companies and Association of Insurance Companies in Lebanon (ACAL) try to make a petition or set up a meeting with the Minister in order to discuss this matter?
Matossian: ACAL tried, but the answer is: we’re not responsible for them and we cannot approach them, it’s the Ministry of Finance who should do the move because eventually it’s the Ministry of Finance that’s losing money. Lots of premiums generated by insurance companies are moving to mutual funds and it’s tax-free
BL: Why don’t you approach the new Minister of finance?
Matossian: I rather leave it to the association to do its role. ACAL knows that a lot of insurance companies in Lebanon opened their own mutual fund on the side just to skip tax and this is very easy to do and get more profits, but it’s damaging our industry.
BL: Let’s talk about Terrorism and Political Violence (SRCC); do you think the suicidal bombers attacks that took place in Beirut will push people to insure against Political Violence (SRCC)?
Matossian: Such incidents will encourage people to insure for a short period of time, as the Lebanese are known to forget the past and look to the future; the various turbulences that occurred in the North and in Beirut encouraged people to shop for Political Violence insurance cover but due to the situation the rates are sky high. Bearing in mind, many clients renew such cover year on year to protect their belongings.
BL: Georges, are the Lebanese insurance companies well-equipped to insure the aviation industry?
Matossian: we have one well known aviation company in Lebanon and that is the Middle East Airlines, which throughout history didn’t experience any tragic incidents. The aviation insurance is taken care of by reinsurers in the underwriting part and in case of a claim, the Lebanese companies in general act as intermediaries as they lack the experience of such risks due to its scarcity.
BL: What are the marine insurance challenges in Lebanon?
Matossian: I don’t see any growth in the marine cargo insurance; the marine business is decreasing for the last three years, mostly due to the situation in Syria. Lebanese traders have fewer requests, which result in fewer shipments to insure. Lebanon is known to be a hub, all shipments to the Arab countries used to come to Lebanon and then transfer by transit to the Arab countries and now due to the regional instability this business paused. On the other hand, some yacht hull business is available to compensate for a part of the decrease in marine insurance. Things will not change until the situation gets calmer in Syria and Lebanon.
BL: What are the reinsurance challenges regarding the terms and conditions of policies especially on the terrorism and political violence (SRSC)? There have been various debates among the international and local reinsurers regarding the terms and conditions of insurance policies especially when it comes to SRSC that took place in Egypt, Tunisia, and Libya
Matossian: It’s true that reinsurers had great losses in Egypt mostly in the political violence policies; what happened in Egypt was unexpected, the SRCC coverage was included with the fire policy at no additional premium. Thus, reinsurers took the initiative to reconsider the SRCC coverage with tougher terms and conditions. The situation in Lebanon differs as we have not experienced the same market or country conditions as the surrounding Arab countries.
BL: What is the latest news at Al Mashrek Insurance and what were the biggest claims that you were involved in during this first half of 2014?
Matossian: We only had one claim this year, it was a fire claim that occurred in a bakery and it was due to the electrical currency fluctuation which happens with most claims in Lebanon. Unfortunately, electrical current fluctuation is very damaging with high fire risk even if the owners take the required precautions. Most of the fires are caused from electricity in Lebanon and it’s very unfortunate that we cannot find a solution for it.
It’s a risky business, but we try to keep on going and hoping that the better will come in the coming years.
BL: How much was the value of the claim?
Matossian: It wasn’t very big, it was estimated around 150 thousand dollars, but thank God it’s the only claim we had, this is the biggest claim till this date in the current year.
BL: what are the plans of Al Mashrek and what are the new developments that happened during this year?
Matossian: We opened a branch in Hadath and we’re opening a new company in Egypt; under the name of United General Insurance. It’s a separate entity; Al Mashrek is a major shareholder in the company.
BL: What are the shares of Al Mashrek?
Matossian: Until now, we don’t have the exact percentage but Al Mashrek will be the major shareholder. We have some local partners, whom I cannot disclose their names at the moment, but it will be known soon once we inaugurate the new company in Egypt, but they have lesser shares, they’re pure investors. Thus, the insurance know-how it will be covered by Al Mashrek. Egypt is a big market, it’s always growing, and it’s a new venture for us with all the changes that happened.
It was a good timing and we hope to see it grow and flourish as per our expectations. Currently, we are seeing that the political situation is stabilizing and we hope for the better.
The Egyptians are different, they have different thinking, different mentality, they love to live and they are hard workers.
BL: What is the capital of the United Insurance?
Matossian: United Insurance is a direct insurance company with a capital of 60 million Egyptian pounds for the first year and then by Egyptian law the capital has to go up to 120 million Egyptian pounds which is around 10 million dollars. It’s quite reasonable.
BL: What’s so special about Egypt that attracted you?
Matossian: Actually, we were in the Egyptian market 12 years ago and there is always growth potential in Egypt. We also had an investment in Royal Insurance Company-Egypt but we decided to have our own entity and be the managers instead of investors. Furthermore, we experienced the growth of Royal Insurance and how the market was moving; it was basically our indices that we got about the market through the investment that we had in Royal Insurance. Subsequently, that’s how we decided to invest the money from the sale of the shares in a new company just to keep them in Egypt.
BL: Now, that you have already the setup for a new company in Egypt, what are the challenges ahead of you for growth and for doing business in Egypt as a Lebanese business people?
Matossian: It’s true we are Lebanese, but Bassam Nakhle, who is going to handle Egypt’s operations, has worked in Egypt before and knows the market quite well. It’s true that most of the business is through intermediaries and brokers, but we believe in Egypt. We have to work in micro insurance, because there’s a mass of population, we’re talking over 90 million inhabitants, so it’s a challenging market. As a startup company, we do not aim for big businesses as most are already insured. We are aiming to expand the numbers of insured Egyptians; we are not there to compete with the existing companies but to work together to develop the insurance sector.
So this is our view, to share the risk in the Egyptian market is much better than to handle it all by ourselves.
If everything goes smoothly as projected then the launch of Egypt’s branch should be before the end of the year.
BL: Did Al Mashrek register growth during the 2013?
Matossian: Yes, we had a growth of around 12%. It’s very good, but as I said earlier, the growth will decrease a bit this year due to the political situation.
I follow up on the Syrian market. I see that Syria has a big market and a potential to grow, but I don’t find it interesting with the current laws. What keeps me away is the capital requirement which is in Syrian pounds and unless the rate against the dollar is stabilized and confirmed, I find it dangerous to invest there at least for the time being.
The currency restriction is a burden on any investor. Of course, the currency fluctuation is very dangerous. Yes I have the appetite, but regulations require some changes or guarantees which would make it more attractive to any investor. Syria is an industrial market and has the opportunity to grow much more by opening up to its neighboring countries.
