Abstract
We have slashed our 2009 and 2010 growth forecasts in the light of the ongoing
global economic
slowdown, as well as a deteriorating security situation in
the Gulf of Aden, which is threatening Suez
Canal traffic. Because the
Egyptian year 2009 refers to the 12 months to July 2009, the damage this
year
will be mitigated: in the first quarter, real GDP expanded by 5.2% -
a sharp slowdown from the overall
2008 rate of 7.2% admittedly, but still
a robust number. Going forward, this will slow to a full-year rate
of
3.7%, and then fall further to 3.0% in 2010. Thereafter, we are expecting
growth of 4-5% for the
remainder of the forecast period.
The data we
have so far does not suggest any reason to panic - but we think it will start
to get worse over
the coming months. The most recent export data is for Q4
of FY07/08, during which receipts expanded
by 39.2% y-o-y. Imports also
performed well, growing by 31.2%, indicating the pre-collapse oil price
but
also a fairly robust level of demand from consumers and producers.
Foreign direct investment (FDI) was
down slightly year-on-year (y-o-y), at
US$1.984bn, compared with US$2.007bn in the same period of the
previous
year, but this is hardly a disaster, and the full-year total was up (at
US13.2bn, from US$11.0bn).
On the financial front, Egypt' s relative
under-development will protect it from the worst of the global
crisis.
Exposure to the US subprime crisis seems to have been limited, and although
the CBE has
guaranteed the deposits of all banks operating locally, there
have been no major bank collapses (which is
more than can be said for a
lot of countries). Egypt has not escaped the liquidity crunch: foreign
currency
liquidity in the banking sector fell to a multi-year low of 44.0%
in September, from 50.1% in June.
Meanwhile, a stock market collapse - the
CASE-30 index is down 64% since peaking in May last year -
is also a
threat to companies seeking financing. However, with a relatively low
loans-to-deposit ratio of
56% in September, Egypt is nowhere near as
leveraged as the Gulf states: the ratio in the UAE and Qatar
for example
is 107% and 113% respectively (with the number for the emirate of Dubai alone
likely to be
significantly higher).
In the Middle East and North
Africa, we profile 17 companies. These are AGF, AIG, Allianz, Aviva,
AXA,
Cardif, ERGO, Eureko, Fortis, Generali, Groupama, HSBC Insurance, Liberty
Mutual,
MAPFRE, RSA, UNIQA and Zurich Financial Services.
We also look
at a number of the smaller local firms that are active in the region,
particularly in Kuwait,
Oman, Saudi Arabia and the UAE.
Over the
course of 2008, estimated total premiums in Egypt rose by 31% to EGP8,889mn.
Non-life
premiums rose by 17% to EGP3,601mn, while life premiums rose by
45% to EGP5,287mn.
Between now and the end of the forecast period, we
expect that annual non-life premiums will rise by
EGP5,709mn, while annual
life premiums should rise by EGP16,492mn.
Growth in non-life premiums
should be driven by the general growth in nominal GDP: we are assuming
that non-life penetration increases from the current level of around 0.40% to
0.65%.
Growth in life premiums should be driven by the change in the
overall population and a rise in life density
from US$9.55 to US$55.00 per
capita.
BMI' s Insurance Business Environment Rating is 47.0 for Egypt.
| 
View Cart
