Insurance Conference-Damascus 2005 Bancassurance in Lebanon AROPE and BLOM Experience.

Insurance Conference-Damascus 2005

Bancassurance in Lebanon AROPE and BLOM Experience

2Insurance Conference-Damascus 2005

Table of Contents

Bancassurance: Regional Trends Lebanese Model proposal Lebanese Insurance Market Bancassurance in Lebanon Arope / BLOM experience


Bancassurance: Regional Trends

Bancassurance is the distribution of insurance products through bank channels.

Europe discovered Bancassurance in the late 70’s and according to a recent study conducted by “AM Best” , significant changes are expected in the Middle East moving over a Bancassurance Distribution Model.


Bancassurance: Regional Trends

Projections: Growth forecasted for Premiums in Personal Lines insurance over the coming 3 to 5 years, mainly due to the following factors:

Expatriate workers are prompting the development of compulsory medical and motor insurance>>impact the concept of insurance among locals

Regulations Reforms that provide a comprehensive insurance framework and open the region to foreign investment

Low insurance penetration rates in the region’s countries.


Lebanese Model Proposal

Similarities between our both insurance markets:– Environment effects– Cultural beliefs– Client behavior

These similarities lead us to believe thatultimately, the Syrian market will be developingin a similar way to the Lebanese, especially in

the area of Bancassurance.


Lebanese Insurance Market Socio-demographic environment

In 2003, Lebanon’s GDP was around $19 billion, two-third of which came from the Services Sector

The Lebanese Population is estimated at around 4 millions

Two-third of the Population is in the 15-64 years age bracket

Life Expectancy at birth is estimated at 72 years.


Lebanese Insurance Market Socio-demographic Environment

Active population constitute 40.5% of total population, nearly 1.62 million

83% of the active population work in the private sector

40% of active population hold “white collar” jobs.


Lebanese Insurance MarketMarket Figures

Non Life (2003)Penetration Rate 2.1%Per Capita Density $95

Life (2003)Penetration Rate 0.7%Per Capita Density $35

Market Premium Income

27%

73%

Life

Non Life


Lebanese Insurance Market Non- Life Market ( in Million USD)

$311 $316$323

$342

$381 $397

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

1999 2000 2001 2002 2003 2004


Lebanese Insurance Market Life Market (in Million USD)

$82 $88

$98

$125

$139

$180

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

1999 2000 2001 2002 2003 2004


Lebanese Insurance Market Non-Life Density in selected countries

$5 $6 $25 $35 $40

$93$117

$243$288

$715

$891

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

Egypt Syria Morocco Jordan KSA Lebanon Kuwait UAE Cyprus France Germany

Den

sit

y 2

002

Density in Lebanon is small by world standard


Lebanese Insurance Market Non-Life Penetration Rate in Selected Countries

0.41% 0.46% 0.50%0.72%

1.95% 2.01%2.18% 2.22%

2.97%

3.70%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

Egypt KSA Syria Kuwait Jordan Morocco Cyprus Lebanon France Germany

pene

trat

ion

rate

(20

02)

This rate is the highest among Arab Countries


Lebanese Insurance MarketOpportunities

Potential for a future market growth: only 30% - 35% of the Lebanese population is insured and awareness is growing.

Insufficiency of NSSF and Government participation in covering all medical needs of population and retirement schemes.


Lebanese Insurance MarketOpportunities

Compulsory motor insurance (bodily injury only) was introduced in 2003

Insurance for expatriates is also compulsory workmen Insurance is compulsory, but not

yet in force Introduction of new law for Public safety in

2005: Decennial for new buildings, Third Party for elevators and Earthquake.


Bancassurance in Lebanon Market Size

Bancassurance operations are estimated at around 20% of the total Lebanese insurance market in 2003.

In the Life sector, premiums increased six-fold over the period 1992-2002, with growth mainly fueled by the introduction of Bancassurance during the last few years

Today, Bancassurance accounts for 31% of all life premiums.


Bancassurance in Lebanon Different Business Models

Banks with participation in Insurance Companies Insurance Companies fully or partially owned by

Banks Banks writing insurance through their fully owned

Brokerage Firms.


Bancassurance in Lebanon Market Facts

47% of Lebanese banks sell insurance products OTC

21% of Lebanese banks work only through affiliated insurers

18% of banks work through independent insurers 8% of banks work through both affiliated

insurers and independents insurers.


AROPE/BLOM Experience BLOM Bank Group

BLOM Bank– Network of 44 branches in Lebanon– Off-shore Banking Unit in Limassol, Cyprus– Branch in Damascus Free Zone– Branch in Amman, Jordan

B.S.O, المهج5ر و س5وريا 2 بن5ك branches in Damascus, 1 branch in Aleppo & 1 branch in Latakieh.

BLOMINVEST, the group’s Investment Bank Banque Banorient, located in Geneva Banque Banorabe, H/O in Paris with branches in London,

Dubai, Sharjah AROPE Insurance, H/O in Beirut and 5 branches in

Lebanon


Largest Bank in Lebanon since 1981 till 2004

BLOM chosen as the best Bank in Lebanon by renown international sources:the Banker, Euromoney, Global Finance and Capital Intelligence

AROPE/BLOM Experience BLOM Bank


AROPE Positioning Consolidated results based on regular growth since 1974 Among the best: 7th rank within a market of 56 Insurance

companies . First Insurance company ISO certified Pioneer in the Bancassurance model creating a financial

“ one stop Shop” solution.

AROPE Insurance was established in 1974 to:Handle BLOM’s own insurance business Supply BLOM clients with all their Insurance needs

AROPE/BLOM Experience AROPE Insurance


AROPE/BLOM Experience AROPE Financial Indicators

Year Premiums S/H Equity Profits ROE Solvency Ratio

2004 24,687,117 11,659,528 2,334,973 25.04% 47.23%2003 14,265,712 9,324,322 1,753,692 23.16% 65.36%2002 11,369,904 7,570,706 1,401,195 22.71% 66.59%2001 10,732,512 6,169,379 1,135,332 22.55% 57.48%2000 8,708,767 5,034,179 864,652 20.73% 57.80%

New Decree:

R.O.E.: 20.39%

Solvency Ratio: 45.47%


AROPE/BLOM Experience Benefits for BLOM Bank

New source of revenue (in tightening financial markets)

Leveraging existing infrastructure (network, front office employees, IT, etc.)

Strengthening relation with clients (continuity insured by renewals of policies).


AROPE/BLOM Experience Benefits for Arope

Using a large existing Network Large Existing Client-base allows for synergies in

marketing: “A good Bank client is a good Insurance client” Development of Personal Line / Retail insurance

business (easy marketing via bank branches) Risk diversification (large number of small policies in

portfolio) Low operating & distribution cost Limited collection problems


AROPE/BLOM Experience Benefits for Clients

Value-added service Convenience: One-Stop Shop for all their financial

needs Payment facilities


AROPE/BLOM Experience Bancassurance Operations

Direct Bancassurance : OTC products

Motor Compulsory Bodily Injury Motor Material Damage Travel Property (office and home).


AROPE/BLOM Experience

Arope Products


AROPE/BLOM Experience Bancassurance Operations

Indirect Bancassurance: BLOM retail products

Retirement Plan: Damanati Education Plan: Waladi Car Loan: Sayarati Consumer Loan : Kardi Home Loan: Darati

Credit cards


AROPE/BLOM Experience BLOM Retail


AROPE/BLOM Experience IT Solution

Two existing models of IT solutions: Online: One database for both, Bank and

Insurance Company Off-line: Separate Database

We opted for the second option for Banking Secrecy’s sake


كلمتنا كلمة. Thanks for your attention!

Insurance Conference-Damascus 2005 Bancassurance in Lebanon AROPE and BLOM Experience.

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