Report highlights growth potential for life companies in Middle East
The Middle East region, particularly the six Gulf Cooperation Council (GCC) countries represents huge growth opportunities for businesses of international life companies and international asset management companies.
The 2012 Middle East Investment Panorama (MEIP) report by strategic research consultancy, Insight Discovery noted that rapid economic growth in the GCC economies is leading to a greater concentration of wealth accumulation.
“Much of these savings are in the hands of expatriates as they form the majority of the GCC workforce,” the report said. “…financial advisers are seen as a vital link between savers and life companies whose roles have become more important as distributors of funds managed by international asset managers.”
Nigel Sillitoe, CEO of Insight Discovery, said there are clearly more opportunities than challenges for international life insurance and asset management companies to do business with financial advisers across the GCC.
“With ever increasing expatriate savings, these fast growing hydrocarbon economies are an ideal client base for all stakeholders. The ‘open architecture’ model adopted by GCC financial advisers is a welcome sign for future growth as the industry matures and becomes more sophisticated.”
He said the model allows advisers to explore products and services from several external providers which is in the best interest of the ultimate end user.
Insight Discovery conducted the survey in partnership with Amundi Asset Management, Franklin Templeton, Morningstar and Standard Life.
Key findings include:
• 60% of financial advisers prefer global emerging market equity funds, while the ‘hottest’ alternative asset classes are gold, commodities and listed real estate.
• The vast majority (83%) of GCC based financial advisers use products and services of international asset managers, but only 29% of advisers are buying funds directly from these companies.
• Financial advisers dealing with international life insurance companies have risen substantially, to 63%, but growth opportunities still exists.
• There are approximately 3,700 financial advisers working in the UAE, a far bigger number than previously estimated.
• GCC based financial advisers and retail investors are becoming increasingly ‘risk tolerant’ and optimistic despite various challenges like local and global economic volatility, regional regulatory uncertainties and the prevailing geopolitical situation.
• Big international asset managers are active in the region but there are still opportunities for new entrants from among the leading life companies.
• The potential for Takaful or Sharia compliant insurance remains underexploited, with fewer than half of financial advisers saying they see it as a major opportunity for life insurers.