Leader on its land, the Moroccan insurance group also operates in six African markets including Egypt. Within three years, its objective is to cover around ten countries by positioning itself on the assistance market. The insurer displays strategic ambitions in reinsurance. He has just recruited an experienced technician, Abdel Wahab Nougaoui, to launch this activity. Meriem Benkhayat, Executive Director of Finance and Strategy at Wafa Assurance analyzes the group’s strategy.
What is your first assessment of your presence in African markets?
Wafa Assurance aims to support the continental strategy of its reference shareholder Al Mada. The group is currently present in six African countries through 10 companies. This presence enables it to cover 39% of the African insurance market, excluding South Africa, with the ambition of reaching a coverage rate of 65% by 2025 through establishment in ten countries.
Our Egyptian subsidiary, Wafa Life Insurance Egypt, approved on August 25, 2020 by the Financial Regulatory Authority to operate in the long-term health and life branches, was launched on July 14, 2021. A subsidiary wholly owned by Wafa Assurance, the company has endowed with a capital of 150 million Egyptian pounds or about 90 million DH (10 million dollars).
This African expansion strategy does not only concern insurance but also assistance. This second component is at the service of the immigrant banking strategy of Attijariwafa bank as well as the automobile and health branches of Wafa Assurance. To this end, in the CIMA zone, the insurance sector regulator has granted assistance reinsurance approval to the Wafa IMA Assistance branch based in Abidjan, Côte d’Ivoire. Thanks to this approval, Wafa IMA Assistance Abidjan will be able to operate in the 14 insurance markets in the CIMA zone and plans to start its activities in 4 markets: Côte d’Ivoire, Cameroon, Senegal and Mali, which represent a challenge for the bank in terms of immigrant banking, and for Wafa Assurance in terms of automobile, health and corporate insurance.
Where do you see the growth drivers for the company, and more generally for your sector?
In Morocco, the resumption of growth was observed from the first half of 2021. Indeed, the growth rate of premiums stood at around 11% at the end of June 2021 against 2.4% at the end of June 2020. This acceleration was visible both in the Life and Non-Life markets. In the medium term, market growth is expected to continue. In Non-Life, for example, the Automotive branch will continue to benefit from the growth in the vehicle fleet. The Life market should also continue to grow and continue to benefit from the potential offered by the conversion of bank deposits into savings in Life insurance products.
Beyond “classic” products, two segments should also develop in the medium term: Microinsurance, which is a major lever in the national financial inclusion strategy. Currently, these insurance products are distributed mainly through banking networks; new distribution channels should also develop, namely payment institutions and digital.
I will also mention the Takaful insurance which will support the development of participatory banks. Indeed, the way to the effective launch of this activity was opened thanks to the publication on October 25, 2021 of the decree of the Ministry of Economy and Finance approving the circular of the Insurance Supervisory Authority. Wafa Assurance has also been approved to operate in this activity.
Furthermore, the implementation of the social protection generalization project launched by His Majesty King Mohammed VI will be accompanied by the development of supplementary health insurance. The latter will enable policyholders to increase their level of cover and to benefit, if necessary, from additional benefits.
Wafa Assurance is a “universal” player already present in all of these markets: Corporate, Individual Life, Individual Non-Life, Individual Health, Inclusive Insurance, Takaful Insurance, Assistance, Digital and International. Its ambition is to retain leadership in the markets where it holds a strong competitive position, to strengthen its position in the other markets in which it operates and to enter a 10th market, which is reinsurance and the development of large risk placement capacities on international reinsurance markets.
How could the fall in interest rates impact the company’s performance?
Wafa Assurance’s investment strategy is based on a strategic allocation of our portfolios to different asset categories: Equities, Fixed Income and Real Estate. This allocation stems from ALM studies carried out on a regular basis, and which define in what proportion we must allocate our assets to each category, taking into account the risk profile, the return objectives and the specificities of our commitments. Thus, in 2020, Wafa Assurance’s portfolio confirmed its resilience in a context of a pandemic which caused an unprecedented economic crisis, resulting in a significant drop in the financial markets in an environment of falling interest rates. started several years ago.
The quality of the investments and the long-term management have made it possible to have a sustained return, and thus allow our clients to benefit from a high revaluation rate in 2020, at the top of the market range. These net revaluation rates are 3.15% and 3.25% respectively, depending on the generation of products. This performance is achieved thanks to the solid fundamentals of Wafa Assurance, with in particular equity amounting to 5.982 billion dirhams at the end of 2020 and a solvency ratio at 2.9 times the regulatory margin excluding unrealized capital gains.
What is behind the explosion of life insurance investments observed in recent years on the Moroccan market?
The life insurance market has experienced strong growth over the past five years, ie +14.1% per year! This double-digit growth is mainly driven by the Savings branch, which remains the largest provider of turnover in this activity with a contribution that has increased sharply. Its weight has thus increased from 76% at the end of 2015 to 86% at the end of 2020.
The strong growth of the Savings branch is due to the attractiveness of the products offered by insurers compared to other investment alternatives. Life insurance products offer attractive returns and also benefit from an advantageous tax framework. For example, pension products allow you to benefit from a deduction of contributions from the tax base on entry, up to 50% for employees, and on exit from a 40% reduction on the capital, provided of course that the conditions relating in particular to the seniority of the contract and the age of the insured are respected. The range of products offered also makes it possible to meet different types of needs, in particular the constitution of an estate or the financing of future projects such as education or retirement… and to the different profiles of savers, including the most well-informed can opt for unit-linked contracts. These contracts combine both the advantages offered by life insurance and access to financial markets according to the risk profile of each saver.
To what extent can the illiquidity affecting real estate explain this attractiveness of insurance for households?
Life insurance, in particular savings products, by virtue of their advantages, namely an attractive return, advantageous taxation and a capital guarantee, meet the needs of the saver in terms of diversification, flexibility and liquidity. . Savings products are flexible investments that allow you to save according to your wishes and abilities, and to dispose of these savings through occasional withdrawals (redemptions) as needed.
Since these advantages are not systematically offered by other types of assets, they can thus represent an element of attractiveness that distinguishes life insurance compared to real estate.