Sheikh Khaldoun Barakat: “Strategic vision for a sustainable sector”
The Chairman of the Board of Directors of the Arab Reinsurance Company (Arab Re), Sheikh Khaldoun Barakat made a detailed review of the situation of the Arab and international reinsurance markets. He indicated that Arab insurance companies cede premiums directly to international reinsurers at high and unhealthy cession rates, so in practice they abandon their roles in covering risks. He explained the problems that weaken the regional reinsurance sector such as the hegemony of international reinsurers that control the prices, which became abnormally low and excessively competitive given their financial powers and advanced services. Therefore, as a solution he emphasized the importance and necessity of mergers and/or coordination among regional Arab reinsurers at various levels and according to different proposed solutions. For example, he gave Lloyd’s as example as it regroups many syndicates that reinsure risks. All of these proposed solutions could help overcome the mentioned challenges of the sector.
Moreover, Sheikh Barakat explained the dynamics and trends in which regional reinsurers become followers of the leader (international reinsurer) as they face increased difficulties in maintaining business levels and the credit rating regionally if these global factors worsen. He confirmed that regional Arab reinsurance companies are well capitalized, so there is no need for additional capitals. However, he said that an added value should to be achieved on invested capitals of the regional reinsurers.
Finally, he emphasized the repeated calls and warnings he made to regional reinsurers about the increasing future risks, so he called for prudence and full awareness about the strategic risks as well as the adoption of the proposed solutions.