In Morocco, the sector is facing a major regulatory challenge, as recalled Khadija El Moussily, senior analyst at BMCE Capital Global Research, during a webinar organized by the Professional Association of Brokerage Companies (APSB ) and the Casablanca Stock Exchange. This challenge is the famous Risk-Based Solvency (SBR) project, a close cousin of Solvency II in Europe. In gradual implementation for several years, this project will have certain impacts on the sector as the analyst points out: “SBR will result in more capital requirements, a tightening of solvency margins and an acceleration of mergers and mergers- acquisitions in the sector”, she says, while specifying a positive point: this reform will improve the transparency of the stock market.
The reform provides for taking into account all the risks to which insurers are exposed in the calculation of the solvency margin, which should “substantially reduce the excess margins of Moroccan companies”, assures the professional. However, Moroccan companies are quite comfortable in absorbing these shocks, as evidenced by the various stress tests carried out.
Impacts of AMO on the profitability of the sector
According to Khadija El Moussily, compulsory health insurance (AMO) will have an impact on both the turnover and the profits of the sector. The impact would be negative on the turnover of companies insofar as health premiums should decrease due to the effect of migration of customers to the public sector. On the other hand, the AMO could have a positive effect on the profits of the companies because the latter will have to offer more health supplements to their policyholders, which is much more profitable than basic products.
Takaful: An additional 100 MDH in bonuses in 2022
Operational in 2022, Takaful should generate additional premiums of 100 MDH this year. However, this activity should weigh on the profitability of the sector and potentially produce a cannibalization of conventional products when the Takaful offer is more diversified, according to the BKGR analyst.
Positive BKGR on the stock market sector
Represented on the stock exchange by 3 companies, the sector enjoys the confidence of analysts from the research office. With regard to Wafa Assurance, a leader in the sector, Khadija El Moussily believes that the company has a comfortable solvency margin and an unfailing ability to maintain its status as a leader in a context marked by tough competition. In addition, the company has an ambitious expansion strategy in Africa, although regulatory constraints may hamper this strategy. Wafa Assurance is also working on diversifying its investments and reducing its significant exposure to equities (28% in 2021). The company should achieve an CAGR of 6% of its turnover between 2021 and 2023 and 9% for its net income.
Saham Assurance is also in the small papers of the analyst, who believes that the company should experience good commercial momentum with, in particular, the launch of unit-linked savings products this year. On a more strategic level, the Sanlam/Allianz merger in Africa should bring economies of scale and introduce new products. In terms of figures, an CAGR of 5% of turnover is anticipated over 2021-2023 and 9% for RN.
AtlantaSanad: “A value in which we believe enormously on a fundamental level”
The company’s commercial dynamics and sound financial management are accelerating its growth. Its investment portfolio is quite profitable, including stocks such as CIH Bank, Oulmès and BMCI with attractive returns. On the strategic side, the acquisition of a 12% stake in CDM’s capital should allow it to develop rapidly, particularly in the Life business, which remains a very profitable business compared to the non-Life business. It remains to be seen what will become of the exclusive distribution contract in bancassurance between CDM and Saham Assurance, which only expires in 2026. Will it be revoked this year or will it run until at its end?
In terms of forecasts, the revenue CAGR is expected to grow at a rate of 6.5% over the period 2021-2023 while the NIGS is expected to increase at a rate of 21% over the period.
The financial result of the sector should continue on its upward trend
The volatility of the financial market this year should not reverse the upward trend in the financial results of companies, according to Khadija El Moussily. For her, and although it is difficult to make market forecasts in the current context, the increase in financial results will be driven mainly by the improvement in dividends distributed by listed companies in 2021. This is an amount in increase of 30% compared to last year and which should limit the impact of the drop in prices.