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Regional Watch IMEA

Broker Version . Regional Watch IMEA. International Markets Market Intelligence January 2010. FOR BROKERS. Disclaimer. Regional Dashboard. ALGERIA. IRAN. QATAR. BAHRAIN. SAUDI ARABIA. KENYA. BANGLADESH. SOUTH AFRICA. KUWAIT. Click to navigate. EGYPT. NIGERIA. SRI LANKA.

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Regional Watch IMEA

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  1. Broker Version Regional Watch IMEA International MarketsMarket IntelligenceJanuary 2010 FOR BROKERS Disclaimer

  2. Regional Dashboard ALGERIA IRAN QATAR BAHRAIN SAUDI ARABIA KENYA BANGLADESH SOUTH AFRICA KUWAIT Click to navigate EGYPT NIGERIA SRI LANKA INDIA PAKISTAN UAE Countries in grey are currently only available for Managing Agents in password-protected Regional Watch Disclaimer

  3. BAHRAIN:country dashboard Health 4% Misc 1% Property 31% MAT 49% Liability 15% DIRECT HANDLING is the major distribution channel. BROKERS are mostly involved with large commercial and industrial risks and reinsurance outside Bahrain. 32 licenced brokers in 2008, with Willis and Aon amongst the largest and longest established international brokers. INTERNET AND BANCASSURANCE currently very weak channels. • COMPULSORY CLASSES: 3rd party liability for motor, professional indemnity for insurance intermediaries and workers compensation. • REGULATOR OF INSURERS AND INTERMEDIARIES: www.cbb.gov.bh DISTRIBUTION Susceptible to droughts (high), earthquakes (medium)and floods (low). CATASTROPHES click for basic information click for detailed information Back To > Regional Dashboard GDP 2008 USD 21BN GDP SIZE IN USD BN AND GDP GROWTH OVERVIEW GDP SIZE : 97th worldwide (UK ranks 6th) EASE OF DOING BUSINESS: 18th worldwide GLOBAL COMPETITIVNESS: 37th worldwide STRENGTHS: one of the region’s leading financial centres with an open economy CHALLENGES: an economy highly dependent on oil and hampered to some degree by the Bahrainisation of private sector jobs. 30 10% 8% 21 20 18 ECONOMY 6% 15 4% 10 2% 0 0% 2006 2007 2008 NON-LIFE DWP 2008 USD 0.19BN DWP SIZE IN USD BN AND DWP GROWTH OVERVIEW SIZE: 87th worldwide (UK ranks 3rd) TOP 5 INSURERS: Bahrain Kuwait Ins Co, Bahrain National Ins Co, Takaful International, Al Ahlia Insurance Co and Gulf Union Ins & Re Co, with a combined market share of 75%. KEY CLASSES: Motor due to its compulsory nature. At 77%, motor is the class with the highest claims ratio. REINSURANCE: USD 0.17bn (2008) GWP PENETRATION: ~ 1.7% (2008) Property & 0.20 40% 0.19 Liability 10% 0.15 0.15 30% MAT 3% Health 16% 0.11 INSURANCE 0.10 20% Misc 5% 0.05 10% 0.00 0% Motor 66% 2006 2007 2008 OVERVIEW SIZE: 65th for Lloyds (UK ranks 2nd) TOP 5 MA’s: write 19% of Lloyd’s total KEY CLASSES: MAT and property REINSURANCE: USD 24.5m (2008) GWP MARKET SHARE: ~ 7.8% (2008) STATUS: direct license only for risks not covered locally given approval from the Central Bank of Bahrain. Cross border reinsurance allowed. NO OFFICE GWP SIZE IN USD M AND DWP GROWTH NON-LIFE GWP 2008 USD 28.4M 30 40% 28.4 30% 21.4 20.1 20 LLOYD’S 20% 10 10% 0 0% 2006 2007 2008 REGULATIONS REGULATIONS Market Intelligence data based on: Bahrain Ministry of Finance, Central Bank of Bahrain, Global Edge, Global Opportunities, Lloyd’s crystal, Lloyd’s Xchanging, Munich Re and World Economic Outlook Database. DWP = direct written premiums. GWP = gross written premium (includes reinsurance). Claims ratio = claims as % of GWP earned from 2005 to 2008. Disclaimer

  4. BAHRAIN:the insurance market Bahrain’s continued development as an important financial centre has created an insurance market amongst the most dynamic in the Gulf region. Although it remains the smallest insurance market in the Gulf Cooperation Council (GCC), it has been growing steadily. Premium growth since 2002 has been strong at approximately 20% annually. The insurance market is expected to continue to grow thanks to growing GDP (approximately 7% annually with equally strong growth expected in the future) and growing insurance awareness within the region. Further growth may be encouraged by the possible introduction of compulsory health insurance for expatriates (awaiting parliament approval) in the next few years. OVERVIEW Foreign convetional 17% Local takaful 16% Local conventional 67% Ceded 49% Retained 51% The key class in Bahrain is motor (66%), of which Lloyd’s writes an insignificant proportion on a reinsurance basis. The second largest class is health (16%), whose size is expected to grow as Bahrain considers compulsory health insurance for expatriates. Again, Lloyd’s writes a very small proportion (4%) of this class. Although MAT is the smallest class (3%), it accounts for approximately half of Lloyd’s written premiums from Bahrain. The following slide provides information for all (Bahrain) insurance classes on GWP size, the split of GWP between retained and ceded premium, the size and growth of the class and the claims ratio for that class over the period 2005-2008. Insurers licenced to write direct business in Bahrain fall into three categories: local conventional insurers (Bahrain Kuwait Insurance Co), local takaful insurers (Takaful International) and foreign conventional insurers with a local branch in Bahrain (ACE American Insurance Co). The insurance company enclosed by brackets indicates the top insurer by premium within the category in 2008. In 2008, local conventional insurers wrote the majority (67%) of non-life DWP. Foreign conventional insurers wrote approximately the same share of non-life DWP as local takaful insurers (17%). KEY CLASSES KEY PLAYERS Back To > Country Dashboard INSURERS 2008 Between 2005 and 2008 approximately half of GWP written in Bahrain was ceded to reinsurers. Motor is the class with the highest retention (85%), whilst all other classes have lower retentions ranging from 20% to 50%. In 2008, Bahrain had 5 registered reinsurance companies, 1 of which was takaful. The leading and oldest local reinsurer is ARIG (Arab Insurance Group). REINSURANCE Market Intelligence data based on figures from CBB, UNEP and articles from Clyde & Co. For more information on takaful read “Takaful Q&A” and “The future of takafu”l from Clyde & Co along with Ernst and Young’s “Takaful Report 2009”. Disclaimer

  5. BAHRAIN:classes of business Retained 31% Ceded 69% 100% 77% 77% 75% 80% 60% 40% 20% 0% 2006 2007 2008 Back To > Country Dashboard GWP 2008 USD 0.36BN CLAIMS RATIO GWP SIZE (USD BN) & GROWTH The key class in Bahrain by GWP is motor; Insurance market growth has been strong due to government investment in infrastructure, private investment in real estate and growing insurance awareness amongst the public; Claims ratio across Bahrain are consistently medium as reported by CBB. 0.4 40% 0.36 Health Property & 0.27 0.3 30% 16% CLASS OVERVIEW 0.24 Liability 23% 0.2 20% Misc 15% MAT 6% 0.1 10% 0.0 0% Motor 40% 2006 2007 2008 CLAIMS RATIO OVERVIEW DWP SIZE (USD M) & GROWTH GWP 2008 A high proportion of property and liability GWP is ceded (78%); Property and liability is a medium sized class (23%) in Bahrain. Lloyd’s writes a significant proportion (15%) of this class; Claims ratio for property and liability are reported to be consistently below the Bahrain insurance market average. USD 83M 17.9 100% 20 160% 80% Retained 15 120% 22% PROP & LIAB 60% 44% 8.0 10 80% 31% 40% 27% 4.8 5 40% 20% Ceded 0 0% 0% 78% 2006 2007 2008 2006 2007 2008 USD 20M A high proportion of MAT GWP is ceded (69%); MAT is a small class (6%) in Bahrain. Lloyd’s writes a large proportion (70%) of this class; Claims ratio for MAT are reported to be consistently below the Bahrain insurance market average. 8 40% 6.3 6 30% 4.8 4.7 MAT 4 20% 2 10% 0 0% 2006 2007 2008 USD 146M A low proportion of motor GWP is ceded (15%); Motor is a large class (40%) in Bahrain, aided by its compulsory nature;Claims ratio for motor are reported to be consistently above the Bahrain insurance market average. 160 30% Ceded 124 108 15% 120 20% 84 MOTOR 80 10% 40 0 0% Retained 85% 2006 2007 2008 USD 55M A high proportion of miscellaneous GWP is ceded (83%); Miscellaneous is a medium sized class (15%) in Bahrain. Lloyd’s writes a small proportion of this class; Claims ratio for miscellaneous are reported to be consistently below the Bahrain insurance market average. 9.3 10 120% 7.0 8 80% 5.3 MISCELLANEOUS 6 40% 4 0% 2 0 - 40% 2006 2007 2008 USD 57M Approximately half of health GWP is ceded (46%); Health is a medium sized class (16%) in Bahrain. Lloyd’s writes a small proportion of this class; Claims ratio for health are reported to be consistently above the Bahrain insurance market average. 40 120% 30.5 30 22.8 80% HEALTH 20 11.3 40% 10 0 0% 2006 2007 2008 Market Intelligence data based on figures from CBB.. Disclaimer

  6. BAHRAIN:Lloyd’s position The Central Bank of Bahrain (CBB) is the regulator of financial services in Bahrain, including insurance. Volume 3 of the CBB rulebook covers the licencing regime for both insurers and intermediaries. CBB’s policy is to allow foreign insurers to operate within the market either by setting up a local branch or as a new start-up – no local ownership is required. Once established, all insurers are expected to maintain minimum solvency margins, with further solvency requirements based on premium income. Licenced insurers are then allowed to write both direct business within the Bahrain market as well as reinsurance of Bahraini and foreign business. 30 40% 80% LIABILITY 25 30% PROPERTY 60% 20 20% MAT 15 10% 40% CBB MISC 10 0% 20% 5 -10% HEALTH 0 -20% 0% 02 03 04 05 06 07 08 01 02 03 04 05 06 07 08 Back To > Country Dashboard CLASS GWP AS % OF TOTAL DWP LLOYD’S GWP SIZE (USD M) AND GROWTH Lloyd’s GWP growth since 2002 has been very erratic. A period of decline between 2002 and 2004 was followed by a period of erratic growth. It is unknown whether Lloyd’s decline in GWP between 2002 and 2004 follows that of the Bahraini insurance market, as data on the latter is available only from 2005. For 2006 and 2007 Lloyd’s GWP growth was below that exhibited by the Bahrain insurance market, before overtaking it in 2008.CAGR since 2002 has been approximately 5%. The chart on the right illustrates how the different classes have been fairing within Lloyd’s, as a percentage of total GWP written by Lloyd’s, from 2001. Lloyd’s two key classes (MAT and property) have been fairing erratically since 2001, which may be partially due to rate changes. In the last 5 years MAT and liability GWP have been on the decline (as a proportion of Lloyd’s GWP) whilst property and health have been on the rise. The Lloyd’s market is fairly consolidated in terms of managing agents, with the top 10 bringing in approximately 32% of GWP. The top 10 brokers place approximately 46% of GWP (2008). OVERVIEW BAHRAIN: regulations The Bahrain Insurance Association (BIA) was formed in 1993 and now boasts 43 members comprising local and foreign insurance and reinsurance companies and insurance intermediaries. The BIA aims to interface with the CBB on behalf of its members and seeks to promote both the insurance industry within Bahrain and Bahrain as a regional insurance centre. BIA For more information on insurance regulation visit the BIA, CBB and Clyde & Co websites. Lloyd’s data from Xchanging. Disclaimer

  7. SAUDI ARABIA:country dashboard Health Misc 4% 8% Motor 2% Property 33% Liability MAT 7% 46% DIRECT HANDLING: strong distribution channel. Most insurance companies have their own direct sales forces. BROKERS: strong distribution channel. Some major international brokers licensed to do business in Saudi Arabia are: AON, Marsh and Willis. All three have a ground presence. INTERNET AND BANCASSURANCE: currently very weak channels. DISTRIBUTION Susceptible to droughts (high) floods (medium) and epidemics (medium). CATASTROPHES click for basic information click for detailed information Back To > Regional Dashboard OVERVIEW GDP SIZE : 20th worldwide (UK ranks 6th) EASE OF DOING BUSINESS: 16th worldwide GLOBAL COMPETITIVNESS: 27th worldwide STRENGTHS: a strong financial position and an economy opening up to foreign investment. CHALLENGES: conservative policies have slowed the liberalisation of an economy strongly dependent on the oil sector. GDP 2008 USD 468BN GDP SIZE IN USD BN AND GDP GROWTH 600 5% 469 4% 384 356 400 ECONOMY 3% 2% 200 1% 0 0% 2006 2007 2008 NON-LIFE DWP 2008 USD 1.83BN DWP SIZE IN USD BN AND DWP GROWTH OVERVIEW SIZE: 43rd worldwide (UK ranks 3rd) TOP 5 INSURERS: Saudi Re, MedGulf, NCCI, Bupa Arabia, Malath Cooperative. The NCCI has a market share in excess of 40%. KEY CLASSES: Health and motor due to their compulsory nature. Claims ratio for the two classes are reported to be consistently above the Saudi Arabian insurance market average. REINSURANCE: USD 0.93bn (2008) GWP PENETRATION: ~ 0.6% 2.0 50% 1.83 40% 1.5 1.41 1.12 30% INSURANCE 1.0 20% 0.5 10% 0.0 0% 2006 2007 2008 OVERVIEW SIZE: 34th for Lloyd’s (UK ranks 2nd) TOP 5 MAs: write 20% of non-life GWP KEY CLASSES: MAT and property REINSURANCE: USD 80m (2008) GWP MARKET SHARE: ~ 3.6% STATUS: direct license only for risks not covered within Saudi Arabia. Cross border reinsurance allowed. No permission to appoint coverholders. NO OFFICE GWP SIZE IN USD M AND DWP GROWTH NON-LIFE GWP 2008 USD 100M 120 40% 100 93 90 30% LLOYD’S 72 60 20% 30 10% 0 0% 2006 2007 2008 COMPULSORY CLASSES: 3rd party motor, professional indemnity for insurance intermediaries, health insurance for expatriates, workers' compensation, medical malpractice REGULATOR OF INSURERS AND INTERMEDIARIES: www.sama.gov.sa REGULATIONS Market Intelligence data based on: Clyde & Co articles, Ernst and Young Takaful Report, Global Edge, Global Opportunities, Lloyd’s crystal, Lloyd’s Xchanging, SAMA (Saudi Arabia Monetary Agency), Munich Re, World Economic Outlook Database and worldwide market interviews. DWP = direct written premiums. GWP = gross written premium (includes reinsurance). Claims ratio = claims as % of GWP earned from 2005 to 2008. Disclaimer

  8. SAUDI ARABIA:catastrophes Saudi Arabia is particularly susceptible to flooding, epidemics and sandstorms. The biggest economic impact and loss of life is attributed to flooding, which in the last 15 years has killed over 300 people in 7 major events. The most notable flood is that of 2009 in Jeddah, which killed over 120 people and caused losses estimated to exceed USD 270m. Three epidemics in the last 15 years, focused around 2000-2001, killed approximately 200 people. Sandstorms are a frequent occurrence, but rarely kill anyone and cause only minor damage to property. OVERVIEW 3.0 40% 2.5 30% 2.0 1.5 20% 1.0 10% 0.5 0.0 0% 03 04 05 06 07 08 Back To > Country Dashboard SAUDI ARABIA: the insurance market (1) The Saudi insurance market is one of the fastest growing insurance markets in the world according to a 2009 report by RNCOS (Research and Consultancy Solutions). The strong steady growth has been on the back of compulsory insurance implementations, which included compulsory motor for foreign cars in 2002 and compulsory health insurance for expatriates in 2006. Additions to compulsory health insurance will include an extension to all Saudis working in the private sector in 2010 and an extensions to all Saudi nationals in the near future. TOTAL GWP SIZE (USD BN) AND GROWTH INSURANCE TREND 2003-2015 Notwithstanding the current financial crisis, the 2009 report on the Saudi insurance market by RNCOS forecasts a 13% annual growth between 2009 and 2013. This should lead to an insurance market worth approximately USD 5bn by 2013. This contrasts with SAMA estimates of a Saudi insurance market worth approximately USD 8bn in 2015. TAKAFUL is an Islamic insurance concept compliant with Shari’ah Law, whose operations are based upon principles of mutuality. Takaful arrangements are based on two unilateral contracts, whereby a participant gifts their contribution to the takaful fund and is then gifted the amount of their claim in the event of a loss. Participants’ contributions must be segregated from the assets of the takaful operator and the participant retains an interest in the takaful fund. The takaful operator then manages the takaful fund on behalf of the participants, sharing back possible resulting surpluses amongst the participants.* CHALLENGES: some potential issues that takaful may face going forward include: the lack of sufficient Shari’ah compliant investments resulting in a undiversified investment portfolio, a lack of (insurance) qualified Shari’ah scholars and sales personnel, a lack of diversified distribution channels such as the internet and bancassurance and uncertainty regarding the genuine Shari’ah compliance of takaful operations and product offerings. OPPORTUNITIES: global takaful contributions are currently estimated to be less than 1% of total worldwide written premiums every year, despite the fact that Muslims account for approximately 25% of the world’s population. Although there are questions with regards to the proportion of this population accessible to insurers, the potential market for takaful remains large. TAKAFUL Market Intelligence data based on figures from SAMA, UNEP and articles from Clyde & Co. * For more information on takaful read “Takaful Q&A” and “The future of takaful” from Clyde & Co along with Ernst and Young’s “Takaful Report 2009”. Disclaimer

  9. SAUDI ARABIA:the insurance market (2) Ceded 33% Retained 67% Back To > Country Dashboard KEY CLASSES in Saudi are health and motor, which together account for approximately 70% of all written premiums (GWP). Lloyd’s two key classes are MAT and property, which together account for approximately 80% of all written premiums (GWP) at Lloyd’s. Interestingly, Lloyd’s two largest classes are two of Saudi’s smallest classes, whilst Lloyd’s two smallest classes (health and motor) are Saudi’s two largest classes. HEALTH is expected to be the fastest growing class due to future extensions in its compulsory nature to include Saudi nationals. It is a competitive market used by many insurers to gain entry into other markets and is characterised by claims ratios which are consistently above the Saudi average across all classes… MOTOR is a developed and competitive market which is expected to continue to grow in size. Again, the claims ratios for motor are consistently above the Saudi average across all classes… This is believed to be due to comparatively low driving standards across the region. LIABILITY is yet to take off across the region. This is believed to be due to a number of factors including a general lack of regulatory requirements and a culture characterised by low litigiousness levels. However, liability is expected to emerge as a considerable opportunity (along with energy) as the number of expatriates in the Gulf region is expected to grow in the medium term. Claims ratio for liability are consistently below the Saudi average across all classes… PROPERTY premiums in the Gulf region are believed to be extremely competitive compared to those charged in international markets. Notwithstanding this, claims ratios for property are consistently below the Saudi average across all classes… MAT includes such risks as supertankers, construction barges and airlines. At 47%, this is Lloyd’s largest class. Claims ratio for MAT are consistently above the Saudi average across all classes…. The following slide provides information for all (Saudi) insurance classes on GWP size, the split of GWP between retained and ceded premium, the size and growth of the class and the claims ratio for that class over the period 2005-2008. All presented data is based on SAMA reports. KEY CLASSES The combination of large risks to be insured and the low levels of local capacity result in low retention levels across Saudi, with approximately a third of all written premiums being ceded to reinsurers in 2008. The vast majority of reinsurance within the gulf region is written on a proportional treaty basis. The rest is written on a facultative basis and is largely predominant within the construction and energy industry. The Cooperative Insurance Regulations ( ) state that Saudi brokers must first seek to place business with licensed Saudi reinsurers before placing with foreign insurers not licensed in Saudi. This introduces a significant competitive advantage to locally registered reinsurance companies. In 2009, Saudi Re is the sole licensed reinsurer in Saudi. Lloyd’s two key classes (MAT and property) are the two classes within Saudi with the highest ceded premium proportion at 75% and 89%, respectively. REINSURANCE Market Intelligence data based on figures from SAMA, articles from Clyde & Co and 2006 reports from worldwide markets entitled “Interviews in London” and “Interviews in Dubai”. Disclaimer

  10. SAUDI ARABIA:classes of business 3.0 40% 2.76 2.20 30% 2.0 1.79 20% 1.0 10% 0.0 0% 2006 2007 2008 80 40% 65 58 58 60 20% 40 0% 20 0 -20% 2006 2007 2008 100% 86% 80% Ceded 60% 50% 75% 39% 40% 20% Retained 0% 25% 2006 2007 2008 Back To > Country Dashboard GWP 2008 USD 2.76BN GWP SIZE (USD BN) & GROWTH CLAIMS RATIO Key classes in SA are health and motor following the introduction of compulsory motor and health insurance; Growth has been strong due to growing insurance awareness and the introduction of compulsory insurance classes; Claims ratio are reported to be consistently medium (between 40% and 50%). CLASS OVERVIEW CLAIMS RATIO OVERVIEW DWP SIZE (USD M) & GROWTH GWP 2008 USD 0.21BN A high proportion of property GWP is ceded (89%); Property is a small class (8%) of which Lloyd’s writes a significant proportion of GWP (15%); Claims ratio for property are reported to be consistently below national average across all classes. 30 20% 25 22 22 15% 20 10% PROPERTY 10 5% 0 0% 2006 2007 2008 USD 0.14BN Approximately half of liability GWP is ceded; Liability is the smallest class (5%) with erratic growth; Claims ratio for liability are reported to be very low and consistently below the national average across all classes. LIABILITY USD 0.20BN A high proportion of MAT GWP is ceded (75%); MAT is a small class (7%) of which Lloyd’s writes a significant proportion of GWP (25%); Claims ratio for MAT are reported to be consistently above the national average across all classes. 60 40% 55 46 40 34 20% MAT 20 0 0% 2006 2007 2008 USD 0.68BN A very low proportion of motor GWP is ceded (5%); Motor is a relatively large class (25%), aided by its compulsory nature. Claims ratio for motor are reported to be consistently above the national average across all classes. 800 40% 100% 656 613 80% 600 30% 484 59% 60% 53% 50% MOTOR 400 20% 40% Ceded 5% 200 10% Retained 20% 95% 0% 0 0% 2006 2007 2008 2006 2007 2008 USD 0.24BN A high proportion of miscellaneous GWP is ceded (87%); Miscellaneous is a small class (9%) with good growth; Claims ratio for miscellaneous are reported to be consistently below the SA average across all classes. 40 60% 33 30 27 40% 22 MISCELLANEOUS 20 20% 10 0 0% 2006 2007 2008 USD 1.29BN • A high proportion of health GWP is ceded (78%); • Health is the largest class (46%), aided by its compulsory nature. Lloyd’s however, writes a very small proportion of GWP (1%); • Claims ratio for health are reported to be consistently above the SA average across all classes. 1001 1000 80% 800 60% 642 600 492 40% HEALTH 400 20% 200 0 0% 2006 2007 2008 Market Intelligence data based on figures from SAMA.. Disclaimer

  11. SAUDI ARABIA:Lloyd’s position 70% LIABILITY 60% 50% PROPERTY 40% MAT 30% MOTOR 20% MISC 10% HEALTH 0% 01 02 03 04 05 06 07 08 Back To > Country Dashboard CLASS GWP AS % OF TOTAL DWP LLOYD’S GWP SIZE (USD M) AND GROWTH 120 40% 30% 100 20% 80 10% 60 0% 40 -10% 20 -20% 0 -30% OVERVIEW 02 03 04 05 06 07 08 Lloyd’s GWP growth since 2002 has been erratic, although largely it has been positive and in excess of 10%. CAGR since 2002 has been approximately 15%. The chart on the right illustrates how the different classes have been fairing within Lloyd’s, as a percentage of total GWP written by Lloyd’s, from 2001. GWP from Lloyd’s two key classes (MAT and property) is very erratic. Furthermore, Lloyd’s GWP in Saudi’s two largest classes (health and motor) is, and always has been, very low. The Lloyd’s market is fairly consolidated in terms of managing agents, with the top 10 bringing in approximately 30% of GWP. The top 10 brokers however, only place approximately 5% of GWP (2008). SAUDI ARABIA: regulations Until the implementation of the Cooperative Insurance Regulations (CIR) in 2004, the Saudi Insurance market was unregulated and largely dominated by Saudi Arabia’s former state monopoly provider the NCCI (National Company for Cooperative Insurance). The NCCI is now known as Tawuniya, and in 2007 still controlled approximately 22% of the total insurance market premium. The introduction of the CIR by SAMA has acted as a catalyst for rapid premium growth within the country. SAMA is keen to promote the growth of a properly regulated insurance market within Saudi Arabia as part of a wider policy aimed at encouraging foreign investment in the country. All insurance companies and insurance intermediaries must be licensed through SAMA. New entrants into the Saudi insurance market are apparently being encouraged by SAMA to consider merging with an existing licensed Saudi insurer as a means of entering the market. In 2009, 29 Saudi insurers were registered as licensed through SAMA. SAMA The CIR state that insurance must be offered on a cooperative basis “in accordance with the Islamic Shari’ah”. The CIR then points to the NCCI’s articles of association as guidance for what constitutes a cooperative basis, although the latter do not set out a detailed framework. The only set requirement would seem to be that a company must maintain separate profit and loss accounts for policyholders and for shareholders, and that there must be a distribution of part of the net surplus from the insurance operations amongst policyholders. CIR For more information on insurance regulation read ‘Insurance in the Kingdom of Saudi Arabia by Clyde & Co and visit the SAMA website. Lloyd’s data from Xchanging. Disclaimer

  12. QATAR:COUNTRY DASHBOARD Motor 14% MAT 14% Property 72% Health 1% Property 26% MAT Liability 8% 65% click for basic information click for detailed information Back To > Regional Dashboard GDP 2008 USD 102BN GDP SIZE IN USD BN AND GDP GROWTH OVERVIEW GDP SIZE : 57th worldwide (UK ranks 6th) EASE OF DOING BUSINESS: 37th worldwide GLOBAL COMPETITIVNESS: 26th worldwide STRENGTHS: top exporter of natural gas with a per capita income amongst the world’s highest. CHALLENGES: an economy dependent both on gas prices and foreign labour. 120 40% 102 30% 71 80 ECONOMY 57 20% 40 10% 0 0% 2006 2007 2008 NON-LIFE GWP 2008 USD 0.93BN GWP SIZE IN USD BN AND GWP GROWTH OVERVIEW SIZE: 57th worldwide (UK ranks 3rd) TOP 5 INSURERS: Qatar Ins Co, Qatar General Ins & Reins, Al Khaleej Ins Co, Qatar Islamic Ins Co, Doha Ins Co. Control 89% of market share. KEY CLASS: Property. Given the size of the property share it is possible that it also includes any liability and miscellaneous premiums. REINSURANCE: USD 0.5bn (estimate 2008) GWP PENETRATION: ~ 0.9% (2008) 1.2 100% 0.93 0.9 75% INSURANCE 0.6 50% 0.51 0.46 0.3 25% 0.0 0% 2006 2007 2008 OVERVIEW SIZE: 55th for Lloyd’s (UK ranks 2nd) TOP 5 MAs: write 21% of non-life GWP KEY CLASSES: MAT and property REINSURANCE: USD 38m (2008) GWP MARKET SHARE: ~ 4.2% (2008) STATUS: no direct licence with reinsurance on a cross-boarder basis only. Appointment of cover-holders is not permitted in Qatar. NO OFFICE GWP SIZE IN USD M AND DWP GROWTH NON-LIFE GWP 2008 USD 38.8M 80 100% 69 63 60 50% LLOYD’S 39 40 0% 20 0 - 50% 2006 2007 2008 DIRECT HANDLING is the major distribution channel for non-life business especially major energy risks. BROKERS are a recently developed distribution channel subject to stringent regulations and not incorporated into the Insurance Decree. Main international brokers licenced in Qatar are Aon, HSBC, Marsh, Nasco and Nexus. BANCASSURANCE is a growing distribution channel. COMPULSORY CLASSES: 3rd party liability for motor, professional indemnity for architects, energy consultants and engineers and liability insurance for aircraft hulls. REGULATOR OF INSURERS AND INTERMEDIARIES: www.qfcra.com REGULATIONS DISTRIBUTION Susceptible to droughts (high), floods (medium) and earthquakes (medium). CATASTROPHES Market Intelligence data based on: Clyde & Co articles, Global Edge, Global Opportunities, Lloyd’s Crystal, Lloyd’s Xchanging, Munich Re, QFCRA, Qatar Insurance and Reinsurance Review 2008, Standard & Poor’s, Swiss Re Sigma and the World Economic Outlook Database. DWP = direct written premiums. GWP = gross written premium (includes reinsurance). Claims ratio = claims as % of GWP earned from 2005 to 2008. Disclaimer

  13. QATAR:THE INSURANCE MARKET Back To > Country Dashboard THE ECONOMY. GDP growth in Qatar over the last 5 years has been strong in excess of 10% annually. In per capita terms, Qatar now has one of the highest levels of GDP in the world. Although strong GDP growth is a recognised driver for a growing insurance market, the size of the insurance market in Qatar will eventually be capped by the (small) size of the population. A report on the Qatar insurance market (2009) by Standard & Poor’s concludes however, that the Qatar insurance market represents an attractive long-term prospect for insurers. MAT. Qatar is developing into a regional hub for marine and aviation transport and infrastructure spending is high. The growth of the marine and aviation transport sector is of great interest, as Lloyd’s is estimated to have written nearly 20% of Qatar MAT premium in 2008. HEALTH. The possible future introduction of compulsory health insurance for expatriates would boost the health insurance sector. This sector is currently non-existent due to free state healthcare available to all Qatar residents – a factor likely to inhibit the growth of health insurance within Qatar. MOTOR. Motor is a relatively small class in Qatar and is currently not very profitable due to low fixed tariffs on compulsory third-party vehicle liability. Motor insurance accounts remain however the principal point of contact between insurers and the vast majority of their retail customers. LOCAL INSURERS. These have been making a concerted effort in the last few years to develop an international dimension to their operations. TAKAFUL. The proportion of the insurance market controlled by takaful insurers is unknown, although it is interesting to note that all local insurers either have a takaful branch or are in the process of establishing a takaful branch in the country. REINSURANCE. The 5 top insurers in Qatar control approximately 90% of the market premium and in the last few years have ceded to foreign reinsurers approximately 60% of their premiums. The size of the reinsurance market within Qatar is hence estimated at USD 500m in 2008. This heavy reliance of local insurers on foreign reinsurers is particularly common for large industrial and commercial risks such as marine, aviation and energy. OVERVIEW Market Intelligence data based on Clyde & Co articles, ‘The Qatar Insurance Review’ by the QFCA and the ‘The Qatar Insurance Sector in 2009’ by Standard & Poor’s Disclaimer

  14. QATAR:Lloyd’s position LIABILITY 100% 80 200% PROPERTY 150% 80% 60 MAT 100% 60% 40 MISC 50% 40% HEALTH 20 0% 20% 0 - 50% 0% 02 03 04 05 06 07 08 01 02 03 04 05 06 07 08 Back To > Country Dashboard CLASS GWP AS % OF TOTAL DWP LLOYD’S GWP SIZE (USD MN) AND GROWTH OVERVIEW Lloyd’s GWP growth since 2002 has been very erratic, with years of strong growth followed by periods of decline. CAGR since 2002 has been approximately 5% The chart on the right illustrates how the different classes have been fairing within Lloyd’s, as a percentage of total GWP written by Lloyd’s, from 2001. Lloyd’s two key classes (MAT and property) have been fairing erratically since 2001, which may be due sizeable rate changes in both classes. In the last four years MAT GWP (as a proportion of Lloyd’s total GWP) has been on the decline, whilst property and liability have been on the rise. Health and miscellaneous have always been extremely small classes. Lloyd’s top 10 managing agents write approximately 30% of GWP, whilst Lloyd’s top 10 brokers place approximately half of Lloyd’s GWP. QATAR: regulations The Qatar Financial Centre (QFC) was established in 2005 along similar lines to the Dubai International Financial Centre (DIFC). International insurers currently registered at the QFC include AXA, AIG and Zurich. Foreign firms operating in or from the QFC can be 100% foreign owned and are allowed to write local business directly. Note that neither the Bahrain Financial Harbour nor the Dubai International Financial Centre allow registered foreign insurers to write local business directly. The QFC Regulatory Authority regulates financial services firms that operate in, or from, the QFC. The regulatory structure imposed by the QFCRA is closely based on that of the UK’s Financial Services Authority and the QFCRA has published detailed rulebooks covering insurers and insurance mediators. The regulatory structure imposed by the QFCRA contrasts with the existing regulatory regime applied internally to local insurers within Qatar (outside the QFC) by the Ministry of Finance, Economy & Commerce. A unified regulator is expected by many towards the end of 2010. QFCRA QATAR: regulations For more information on insurance regulation visit the QFCRA website . Lloyd’s data from Xchanging. Disclaimer

  15. UAE:COUNTRY DASHBOARD Health Property 5 40% 14% 17% 4.08 4 30% 3.25 Misc 3 MAT 2.36 20% 18% 2 16% 10% 1 0 0% Motor 2006 2007 2008 35% 160 50% 145 121 40% 120 30% 84 80 20% 40 10% 0 0% 2006 2007 2008 click for basic information click for detailed information Back To > Regional Dashboard GDP 2008 USD 262BN GDP SIZE IN USD BN AND GDP GROWTH OVERVIEW GDP SIZE : 36th worldwide (UK ranks 6th) EASE OF DOING BUSINESS: 46th worldwide GLOBAL COMPETITIVNESS: 31st worldwide STRENGTHS: an international hub for trade with a competitive business environment. CHALLENGES: an economy dependent on oil and property investment; exposed to external and more recently internal shocks and a scarcity of available financial data. 300 20% Agriculture 2% 262 15% 180 200 Services ECONOMY 164 36% 10% 100 Industry 5% 62% 0 0% 2006 2007 2008 NON-LIFE GWP 2008 USD 4.08BN GWP SIZE IN USD BN AND GWP GROWTH OVERVIEW SIZE: 38th worldwide (UK ranks 3rd) TOP INSURERS: Oman Ins Co, ADNIC, Islamic Arab, Arab Orient and Al Ain Ahlia are estimated to have a 33% market share. KEY CLASS: motor due to its compulsory nature. REINSURANCE: N/A GWP PENETRATION: ~ 1.6% (2008) INSURANCE OVERVIEW SIZE: 24th for Lloyd’s (UK ranks 2nd) TOP 5 MAs: write 19% of non-life GWP KEY CLASSES: MAT and property REINSURANCE: USD 97m (2008) GWP MARKET SHARE: ~ 3.6% (2008) STATUS: no direct licence with reinsurance on a cross-border basis only. Appointment of cover-holders is not permitted in the UAE. NO OFFICE GWP SIZE IN USD M AND DWP GROWTH NON-LIFE GWP 2008 USD 145M Health 6% Motor Property LLOYD’S 5% 20% Liability 13% MAT 55% The market for major risks is dominated by direct sales in Abu Dhabi and international brokers in Dubai. Government business in the emirates is always put out to tender. Bancassurance and the internet are weak channels. International brokers such as Aon, Heath Lambert, HSBC, Marsh and Willis dominate the broker channel within the emirates. COMPULSORY CLASSES: 3rd party liability for motor, professional indemnity for insurance intermediaries and health for expatriates. REGULATOR OF INSURERS AND INTERMEDIARIES:www.government.ae/gov REGULATIONS DISTRIBUTION Susceptible to droughts (high), earthquakes (medium) and floods (medium). CATASTROPHES Market Intelligence data based on: Clyde & Co articles, Global Edge, Global Opportunities, Lloyd’s Crystal, Lloyd’s Xchanging, Munich Re, Swiss Re Sigma, UAE Interact and the World Economic Outlook Database. DWP = direct written premiums. GWP = gross written premium (includes reinsurance). Claims ratio = claims as % of GWP earned from 2005 to 2008. Disclaimer

  16. UAE:insurance market Back To > Country Dashboard MARKET GROWTH. Over the last decade, the growth in the UAE insurance market has been driven by the introduction of compulsory motor insurance, the boom in the construction and real estate sector and the recent introduction of compulsory health insurance for expatriates. The CAGR since 2005 has been strong at over 30%, and the UAE insurance market is currently the largest insurance market in the GCC. Growth is however expected to slow down in the near future following weak sales in 2009 and the current economic challenges, as less new cars and homes were sold and construction projects delays and cancellations set in. What future growth will occur is expected to be led by the health, property and engineering sectors but will, in the long term, ultimately be capped by the limited population of the UAE. MARKET COMPOSITION. The breakdown of the insurance market is fairly even between all classes. Motor is slightly larger due to its compulsory nature whilst there is currently a limited market for liability, most possibly due to the low litigiousness characteristic of the region. Takaful insurance accounted for approximately 20% of GWP in 2008. Although the proportion of premiums ceded to reinsurers is unknown, it is believed to be shrinking with respect to that ceded in the past. OVERVIEW THE DIFC. The Dubai International Financial Centre was established in 2004 and since then has attracted some major international insurance players including Alliance, Aon, JLT, Generali, Gulf Re, Lockton, Marsh and Tokio Marine as well as Lloyd’s Watkins. Firms operating within the DIFC are regulated by the Dubai Financial Services Authority (DFSA), whose current aim is to bring its regime in line with that of other global insurance markets. RESTRICTIONS. Currently there are no restrictions with regards to 100% foreign ownership of firms within the DIFC. Although foreign firms based in the DIFC can currently operate only on a reinsurance basis for local UAE risks, this restriction is expected to be relaxed in the near future. LLOYD’S STATUS. For direct insurance purposes, Lloyd’s may appoint coverholders to write both DIFC based risks and non UAE based risks. For reinsurance purposes, Lloyd’s can either operate on a crossborder basis or appoint coverholders to write UAE and DIFC based risks. All coverholders must first be approved by the DFSA. DIFC For more information on the insurance market in the UAE visit UAE interact, Clyde & Co and the Sigma Re website. Information on Lloyd’s status from Lloyd’s Crystal. Disclaimer

  17. UAE:Lloyd’s position 100% LIABILITY 160 60% PROPERTY 80% 120 40% MAT 60% 80 20% MISC 40% 40 0% HEALTH 20% 0% 0 -20% 01 02 03 04 05 06 07 08 02 03 04 05 06 07 08 Back To > Country Dashboard CLASS GWP AS % OF TOTAL DWP LLOYD’S GWP SIZE (USD MN) AND GROWTH OVERVIEW Lloyd’s GWP growth since 2002 has been erratic, although largely it has been positive and in excess of 20%. CAGR since 2002 has been in excess of 20%. The chart on the right illustrates how the different classes have been fairing within Lloyd’s, as a percentage of total GWP written by Lloyd’s, from 2001. Lloyd’s key class (MAT) has always contributed the majority of Lloyd’s GWP, although its contribution has been on the decline since 2004. Classes which have instead been increasing in GWP contribution since 2004 are health and property. Lloyd’s top 10 managing agents write approximately 30% of GWP, whilst Lloyd’s top 10 brokers place approximately 40% of Lloyd’s GWP Data on Lloyd’s from Xchanging. Disclaimer

  18. Appendix:Lloyd’s Data Limitations Back To > Regional Dashboard Please note the information contained in this document is based upon data collected from Xchanging and may be incomplete for some classes of business; for instance a substantial figure, which is missing from the REG 258 data set is comprised of UK Motor, which is not processed by Xchanging. Gross Premiums: Original and additional inward premiums, plus any amount in respect of administration fees or policy expenses remitted with a premium but before the deduction of outward reinsurance premiums. Lloyd’s figures are based on gross written premiums based on figures processed by Xchanging by processing year and country of origin. Country of Origin: denotes the country from where demand for the insurance / reinsurance emanates; i.e. the coverholder or policyholder, irrespective of the country to which the risk is classified for regulatory reporting purposes. Processing Year: relates to the calendar year in which the premium, additional or return premium is processed by Xchanging, irrespective of the actual underwriting year of account of the risks (which is determined by the inception date of each risk). Example: A policy holder in the UK insuring a holiday home in France would be classified as a UK risk by Country Of Origin, but French for regulatory reporting purposes. Similarly a risk incepting on 1st December 2007 would be classified at 2007 underwriting year of account but may not be processed by Xchanging until 2008 and so be allocated to the 2008 processing year Disclaimer

  19. Disclaimer This document is intended for general information purposes only. Whilst all care has been taken to ensure the accuracy of the information Lloyd's does not accept any responsibility for any errors or omissions. Lloyd's does not accept any responsibility or liability for any loss to any person acting or refraining from action as a result of, but not limited to, any statement, fact, figure, expression of opinion or belief obtained in this document.

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