Lhe insurance sector has shown resilience in the face of the health crisis. Of course, profitability was impacted by the drop in the stock market. But the technical result held up well and, against all expectations, savings directed to the sector never did as well as during the pandemic. Two years later, the economic context is deteriorating again with an economic crisis looming under the effect of inflation and tensions in supply chains.
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 Stock Exchange 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 progressive implementation for a few years, this project will have certain impacts on the sector.
“SBR will result in more capital requirements, a tightening of solvency margins and an acceleration of mergers and mergers and acquisitions in the sector”, says El Moussily, while specifying a positive point: this reform will improve market transparency. scholarship. “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 companies insofar as 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 market 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 in 2021 and 2022 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 strongly believe on a fundamental level”
The commercial dynamics of the company and its sound financial management are accelerating its growth. Its investment portfolio is quite profitable, with in particular stocks such as CIH Bank, Oulmès and BMCI, for attractive returns. On the strategic side, the acquisition of a 12.8% 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, revenue CAGR is expected to grow at a pace of 6.5% over the period 2021-2022, while NIGS is expected to grow at a pace 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.