EFS floats National General Insurance

Emirates Financial Services floats 55% of a company that it says has huge potential for growth in its core health insurance business.

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By  David Ingham Published  February 21, 2001

Emirates Financial Services (EFS) today begins the flotation of 55% of the equity of National General Insurance (NGI).

3,300,000 shares of NGI are being offered at a price of AED 10 per share. The offer is open only to UAE nationals, in accordance with Federal law.

EFS says the flotation is an opportunity to invest in a company with huge potential for growth in its core businesses, especially health insurance.

According to Dr Abdul Zahra, general manager of NGI, private healthcare is already booming in the UAE as state systems struggle to keep up with growth in demand. “There is demand [for private health insurance] from individuals and from government institutions, like DEWA and Etisalat,” says Dr Zahra.

On top of this, it also seems “very likely” that medical insurance will become mandatory in private UAE companies, according to Suresh Kumar, general manager of EFS. This, he believes, will drive a huge additional boom in the market.

At the same time, Dr Zahra concedes the difficulties involved in making money on health insurance. “Medical insurance is a money loser unless you manage risk and set premiums correctly,” Dr Zahra says. “Any company starting with medical has to bear high expenses.”

NGI says, however, that it’s now mastered the notoriously difficult art of health insurance, and is now well poised to take advantage of what could be an explosion in the sector.

Its balance sheets lend some support to that claim. After an underwriting loss on health insurance of 1.4 million in 1998, NGI posted a profit of AED 0.45 million in 2002.

Overall, the company’s gross premiums reached AED 37.7 million in 2000 and net profit was AED 1.515 million. Those figures are expected to grow to AED 58.5 million and AED 6.92 million respectively in 2002.

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