DUBAI — Continental Insurance Group, one of the leading insurance brokerage and financial services companies in the UAE, plans to make forays into the Qatar and Kenya markets next year as part of its expansion drive in the region, its top official said.

The leading insurance brokerage and financial services group in the UAE is expected to post strong business in 2011 as it recorded a 40 per cent growth in premiums during the first half of this year.

“The growth potential of the insurance industry in the GCC is tremendous given the relatively low insurance penetration levels, growing population and infrastructure development,” founder and managing director of Continental Insurance Group Ashok Sardana told Khaleej Times in an interview. He said life insurance and savings are strong growth areas for the group, which caters largely to the expat population in the UAE.

Excerpts from the interview:

How do you rate the company’s performance in 2010? Did the recession have any impact on business?

2010 was a good year for Continental. We saw the economy improving and the markets displayed signs of stability. Overall, business grew by 30 per cent compared to 2009. We saw the recession impact us in 2008-09 during which business was down by approximately 10 per cent over 2007. We believe in serving our clients and being in front of them during the good times as well as the bad times and we found our clients did not desert us during these times. In 2010 we implemented several strategic and operational initiatives that should see us build a stronger and more resilient organisation as we move to expand and build a strong regional presence.

How did the downturn changed the insurance sector? What are the preferred investment vehicles in the post-recession era?

We have seen consumers become more risk-conscious after the downturn. In the years leading up to the crisis, we saw a healthy appetite for investment-linked products. Clients favoured these as they harnessed the energy of strong investment markets, the downturn brought a more realistic perspective of risk, unnerved customers moved towards the more traditional or guaranteed products. Those who kept calm, understood what was happening, and continued to invest reaped very strong returns.

How do you see 2011 for the group? How was its first-half performance?

We have continued to display strong growth in 2011. We have maintained our growth trajectory coming in from 2010 and are optimistic that the second half will boost revenues further. In the first half, we have seen a growth of 40 per cent in premiums over the same period in 2010. The life insurance segment continues to be our key growth driver with employee benefits increasing its share of contribution to our total revenues.

What are the firm’s premium targets in various segments this year?

We have set very aggressive premium targets and going by our half-year performance we are on the right track. Traditionally our business does very well in the second half and we expect to finish the year on a very strong note.

Do you have any major products in the pipeline that can boost the company’s growth?

We are not focused on products; we at Continental listen to our clients, their long-term goals, concerns, objectives, their aspirations, we look at their needs and then tailor solutions to address them. From the many discussions, analysis and feedback we have from our clients we are able to identify opportunities and we are working very closely with our insurance partners to develop solutions that fulfill those needs.

What is your growth strategy?

We have a multi-pronged approach to growing the business. We find that there are several areas where there are significant opportunities for us to grow further. Employee benefits and high value life insurance are some areas that we are focusing on.

Do you have plans to expand operations in the GCC or Middle East?

Yes, we have plans to expand operations in the GCC and Africa. We are set to launch Qatar operations next year. Qatar is a fast growing market and we expect the market to double in the next three years. It is also one of the fastest growing insurance markets in the GCC and it is expected to grow at a CAGR of 30 per cent by 2015. The growth potential of the insurance industry in the GCC is tremendous given the relatively low insurance penetration levels, growing population and infrastructure development. We do have plans for Africa and may start our operations in Kenya next year. In 2011, we also made a foray into the Sri Lankan market and are expected to attract good business in the country.

Will the ongoing unrest in the region will boost or hit the insurance sector?

An environment that is unstable is always detrimental. There are both positives and negatives for the insurance industry in a scenario such as this. The negatives are clearly losses to life and property and the resulting increase in premiums resulting from higher risk and claims payouts putting a strain on capital. Some companies have also stopped accepting business from markets such as Syria, Egypt and Libya for the time being. The positive for the industry is that there is a higher demand for cover that caters to the specific needs such as political risk cover, sabotage and terrorism cover, strikes, riots and civil risk cover. These situations also tend to put the focus on the importance of adequate insurance thereby creating awareness on putting protection in place before it is needed.

What is the company’s strong area of growth?

Life insurance and savings are strong growth areas for us and we cater largely to the expat population in the UAE. We have a diverse mix of advisors right from Asian to European nationals and they reach out quite well to our target market. We are constantly growing both our operations and advisory team and are always on the lookout for good people.

What is the breakdown of your insurance business?

If we look at the current split of our business, about 65 per cent of our business comes from the life and regular savings segment, employee benefits contributes to about 20 per cent with investments at about 11 per cent and general insurance at about four per cent.

How do you see the future of the insurance market in the region?

Insurance penetration in the region is among the lowest globally at 1.3 per cent for the GGC. Insurance penetration in the UAE is at just 0.31 per cent for life insurance and 2.16 per cent for the non-life segment. The low-penetration levels and low density demonstrate the significant growth potential that the industry has. The advantages that the region has is that the population tends to be young with a majority of the people of working age with high per-capita incomes and generally high savings rate when compared to the world average. However, factors to be overcome are price competition in the general insurance sectors, volatile financial markets and uncertain economic conditions in the global markets and a lack of awareness on the importance and need of financial planning.

In a volatile market scenario, how prudent is it to invest in unit-linked plans? What are the best investment options for an investor to avoid such instability?

There is no one pill that cures all in financial services. A need analysis that maps your goals and priorities combined with a risk appetite and aptitude test will help determine the best investment route for a client. Understanding risk and your attitude towards it in a crunch situation is the key to implementing a successful financial plan. When you invest with a clearly defined objective and not as a trader looking to make a quick buck you will see that there is a lot of clarity available on the route that will get you to your objective. Unit-linked plans are still quite popular and have their place in the financial mix as do traditional savings options, equity and other asset classes, as the saying goes it is wise not to put all your eggs in one basket.

Muzaffar Rizvi - - Khaleej Times