Anchored for 110 years in the Tunisian mutual fabric, the Tunisian Caisse d’Assurances Mutuelles Agricoles (CTAMA) has continued to perpetuate its vocation by serving the interests of agriculture through the transmission of the heritage of the mutual. Unrecognized strength over the past decade, due to continued instability from the countrythe CTAMA was able to rise from its ashes.
Given for dead over the past decade, CTAMA has succeeded to see the light at the end of the tunnel. In 2020, thea mutual insurance company got rid of several years ofe deficit to display his first net profit under the direction of Mr. Lamjed BOUKHRIS. At the head of the company since 2018, the Managing Director of CTAMA will introduce us to the keys to this success. Interview.
Mr. Lamjed BOUKHRIS, Director General of CTAMA
If you tell us about the history of agricultural mutuals and their roots in Tunisia
The youth of Tunisian insurance began with the Tunisian Caisse d’Assurances Mutuelles Agricoles (CTAMA) in 1912, then called Assurances Tunisie. It was a continuation of the mutual agricultural organization set up in French Algeria, duplicated in Tunisia before being implemented in Morocco.
It was a question of a mutual cooperative for farmers to protect themselves against risks and accidents that could affect livestock and field crops. The activities of Assurances Tunisie began in Makthar before being duplicated in Tunis.
In 1961, a tunisization took place for agricultural mutuals through the creation of the CTAMA. In addition to its specialization in agricultural insurance, the Fund has founded another mutual insurance company, namely the Mutuelle Générale d’Assurances (MGA), which insures other non-agricultural activities.
However, despite the existence of a specialized fund for agricultural insurance, the sector remains limited. The insurance penetration rate in agriculture remains low. It currently represents one-thirtieth of the overall penetration rate of insurance in the national economy, itself frail at between 2% and 3%, against a world average of 7%.
Although the CTAMA has been working for decades to expand the insurance penetration rate in agriculture with the help of certain organizations such as the Tunisian Union of Agriculture and Fisheries (UTAP), the penetration remains low. Moreover, we conducted a study on the reasons for this weakness of insurance in the agricultural sector and how to remedy this problem.
From 2011, the financial situation of the CTAMA deteriorated markedly. What are the causes ?
The CTAMA went through a difficult period in 2011 due to the tense situation marked by internal and social difficulties. This instability affected its image, generating the first deficits from that year.
The situation was further weakened in 2014 following the absorption of the MGA, which did not achieve the expected results. The operation, completed in 2018, was necessary in view of the deficits of the MGA due to a specialization in a single branch of activity.
It is therefore clear that the CTAMA experienced several disappointments from 2011 to 2017 due to the damage suffered in terms of its image, its financial results and its equity. A great insufficiency in terms of the financial returns of the CTAMA is visible but it has a large real estate heritage. Mutuals around the world aim to hold a significant real estate portfolio by increasing the number of acquisitions to generate long-term capital gains.
We thus insure risks that we should not cover because they widen our deficit by causing us to lose millions of dinars. To this fragile situation was added the absorption of the MGA. Moreover, social overload is another aspect of the blows dealt to the sector after the 2011 revolution.
At the end of 2017, the CTAMA achieved a low turnover of 79 million dinars with a workforce of more than 400, which is twice the standard for the insurance sector. Problems at the level of the CTAMA information system are also to be listed.
In addition, the company had a bank overdraft of several million dinars which was constantly widening, which prompted it to pay interest when in normal times, the mutual should receive it according to its investments. Finances were so struggling that the authorities were going to appoint a judicial administrator in 2017 for the CTAMA.
In view of all these problems, how did you manage the situation when you arrived at the head of the company?
The essential core of the company is its information system. The CTAMA had two choices. Either it develops its own system or it buys one. If the information system is purchased, this would incur high costs. At the same time, the acquisition of an information system presented risks of inadequacy for the staff because the changes are not easily assimilated, which would give rise to the conduct of training for the use of the software.
Since the CTAMA has an excellent team of computer engineers, we contacted an external consultant to help us carry out this project internally. The newly developed information system covering all insurance activities was implemented quickly, in the space of a year. The CTAMA sees in this system a possibility of sale in the years to come for African companies.
Consequently, this information system facilitated underwriting operations and allowed us to keep an eye on contracts and regulations. The old system was outdated and was not easy to manage given its complexity. With the new information system, everything is listed instantly.
Staff management is another major focus of the restructuring plan. Indeed, the dismissals were ruled out given that the social situation in Tunisia is tense, in addition to the corporate culture present in mutuals around the world which advocates solidarity. The social sanitation proposal was not an option.
Thus, we offered to staff belonging to our network to become agents for their own account, killing two birds with one stone. The expected goal is to reduce the number of employees and boost production and productivity through their motivation. About twenty people have therefore decided to work for the CTAMA as agents, which has increased our turnover.
In addition, we have decided to sell part of our real estate assets to meet our financial commitments. The Board of Directors was courageous in initiating this maneuver since it is difficult for a mutual to get rid of its assets. Also, the General Insurance Committee (CGA) helped us according to the maneuvers that were possible for it to carry out the reforms that we proposed.
From what year did the situation begin to improve?
It was not until 2019 that the situation began to improve. That year, the overdraft was absorbed in addition to real stability at the social level, which is a success. However, our auditors were skeptical when we reported on the good financial health of the company and always underlined the need for an additional effort of provisioning.
The year 2020 ended with a success for the CTAMA. This pivotal year allowed the company to achieve its first net profit in a decade. Our profits were 5.7 million dinars. Still, the company once again had to reflect and work together with the supervisory authority, the CGA, on the situation of its own funds.
For the 2021 financial year, our turnover was close to 150 million dinars. The CTAMA has been able to double its turnover in four years. It stood at 78 million dinars in 2017. It is clear that the financial rehabilitation of the company depends on improving the level of its activity. Indeed, rising incomes ensure the remuneration of staff as well as the reimbursement of beneficiaries of the CTAMA.
What are the future prospects of the CTAMA?
Even if the mutual made a profit in 2020, other measures had to be found to crystallize its financial health. The solutions that can be adopted by mutuals are limited given the absence of one or two reference shareholders in its capital, unlike other insurance companies.
Thus, we hired a Tunisian investment bank, CAP Bank, to offer us the appropriate strategies to guarantee a good financial restructuring of the company. We have been moving forward on the diagnostic part for almost a month and a half and we are looking forward to what would be the start of a new era for CTAMA. Even the staff is open to these proposals since the objective remains the sustainability of the company.
We expect the next few years to be surplus for the CTAMA like 2020. The uptrend will continue. I hope that the study will lead to a financial or technical partnership, that is to say, with a Tunisian bank or with an operator close to the agricultural sector. These solutions can ensure the future of the mutual and could even hoist the CTAMA among the best insurance companies in the country.
Interview by Omar El Oudi
Published on 02/21/2022 11:00:03