March What about this gloomy outlook? President Michel Sleiman Meets Prime Minister Najib Mikati

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CONTENTS March 2012 COVER INTERVIEW 11 I Heads Back To Basics MANAGEMENT AND FINANCE 14 I Lebanon's Economy At Risk From Syria's Unrest 16 I Bahrain The Capital Of Arab Culture 2012 18 I CIBAPI

2 CONTENTS March 2012 COVER INTERVIEW 11 I Heads Back To Basics MANAGEMENT AND FINANCE 14 I Lebanon's Economy At Risk From Syria's Unrest 16 I Bahrain The Capital Of Arab Culture I CIBAPI Scales Up Activities In Sudan 20 I US To Invest Over US$ 8Bn In Qatar 22 I Net Income Of ABG Jumps ByIO% 24 I BBK Reports Net Profits Of BD 31.8 Million Interview: Nagib M. Bahous, Chief Executive Officer of ACE Group 42 I Arig Posts Net Loss Following A Difficult Year 44 I BKIC BOD Proposed Cash Dividend Of 25% & IO% Bonus Shares 46 I International Finance Corporation Invests $124 Million in Medgulf 51 I New Concerns for Gulf Arabs INFORMATION INDUSTRY 58 I Demand On High End Home Entertainment Products 30 I Middle East Power Sector Set to Expand 32 I QP And Qapco To Build $ 5 bn Petrochem Plant 36 I Saudi Arabia's Health Recording Growth 38 I Growth Of The Middle East 40 I Takaful International Reelects The Board Members For Three years What about this gloomy outlook? President Michel Sleiman Meets Prime Minister Najib Mikati QUICK NEWS 8 Middle East Scan 32 Market Brief The 8th Annual Middle East Insurance Forum: VIP guests during the MEIF conference on 'Growth of the Middle East ' 54 Middle East Markets 56 First Look on Lebanon 60 Middle East Event Calendar 34 News From Around The World 62 What's New? Business Life (ISSN ) published in Lebanon, by Business Life. Editorial, Executive, Circulation, and Advertising Offices: Gharios Bldg., Shoukri Ghanem Street, Beirut, Lebanon. Company and regional subscriber rate $50/year. Lebanon subscriber rate for individuals only $25/year. Rest ofthe world $100/year. Send address changes by tosubscribe@businesslife.net. All rights reserved. Reproduction in whole or in part without written permission is prohibited'. BUSINESS LIFE MARCH

COVER INTERVIEW Heads Back To Basics Nagib Maurice Bahous explains the major issues driving the insurance industry in the Middle East and North Africa The insurance industry landscape that has

3 COVER INTERVIEW Heads Back To Basics Nagib Maurice Bahous explains the major issues driving the insurance industry in the Middle East and North Africa The insurance industry landscape that has emerged from the turmoil of the financial crisis is different from what it used to be. Insurance and Reinsurance companies are back to the basics of writing business for profit. ere) Insurers can no longer absorb underwriting losses from investment income. The overriding challenges are how to maximize the limited investment return and how to make underwriting profit. Nagib M. Bahous, President and CEO of MIG Holding, The Insurance Holding Company of the Mawarid group, believes that the Gulf will continue to be the main focus of new ere) Insurance operators in the MENA region because unlike other parts of the world, the GCC economy is still showing steady growth. In addition, with foreign companies targeting the GCC, regional companies are investing more in their own markets to cope with the competition from foreign companies. The MIG Holding CEO is an insurance veteran with over 30 years of experience in Europe and the Middle East. His successful achievements were mainly at the ACE Group where he gained most of his experience and where he is proud to be part of the team that contributed to the success and growth of the group. Nagib strongly believes that with the vision and support of shareholders, the Group will vigorously pursue new opportunities and new ventures. The group continues to rely on profit maximization and its geographical and portfolio diversification policy; a strategy followed by shareholders, which has yielded excellent results. BL: The financial crisis has had an Increasingly visible Impact and challenge on the insurance industry, primarily through their investment portfolios. As such, should insurance companies focus more on the underwriting rather than depending on the investments? Why? BAHOUS: I call this 'going back to basics'. The investors of insurance companies are in the business to make money out of insurance and not out of the investments on capital. If the core insurance operation does not give a good return, the shareholders would be better off investing their money somewhere else. Insurers are now aiming at achieving good underwriting surplus. The local companies operating in the GCC market are relatively small in size compared to the foreign insurers currently operating in this market. Even though some of the top local insurers have achieved huge premium volumes, the foreign companies are multinational with a huge investment portfolio and huge premium writings that are in the billions of US dollars. The average local company premium writings are in Interview: Nagib M. Bahous, President and Chief Executive Officer of MIG Holding, The Insurance Holding Company of the Mawarid group previously known as the ACE Group BUSINESS LIFE MARCH 2012 II

spending in the West is around 65% / 35%. In our region the percentages are in reverse. This shows that the life and savings business has the potential to grow in a big way.

4 spending in the West is around 65% / 35%. In our region the percentages are in reverse. This shows that the life and savings business has the potential to grow in a big way. BL: How long will It take the Middle East to have proper Insurance awareness and a developed industry? BAHOUS: Awareness comes from dealing with the subject, it's not always theoretical. I believe that awareness programs should start at schools, universities and through social and educational programs for the general public so that people understand and have a feel of what insurance is about. Take Saudi Arabia as an example; in the past not too many Saudis worked in this industry. With the introduction of insurance laws, compulsory laws, and insurance training programs, a large percentage of the current insurance workforce is Saudi. The general public has to understand and feel the necessity for insurance so that they accept to deal with it. When people start dealing with insurance they will appreciate its benefits. Awareness is a process that has to take place at all levels; it should start at schools, universities, institutes and continue with public education and the actual interaction with insurance companies. Vigorously pursuing new opportunities and new ventures: Nagib M. Bahous, President fj Chief Executive Officer of MIG Holding, The Insurance Holding Company of Mawarid group previously known as the ACE Group hundreds of millions ofds Dollars and not billions; for this reason focusing on the core business in order to achieve underwriting profit becomes much more important. While the regional insurance markets remain under-penetrated, economic experts project exciting growth rates of anywhere between 20% to 30% per annum over the next five years. BL: Amid growing market saturation, the insurance market in Europe at the moment are said to be quite saturated. How true is it that the insurance and reinsurance markets of the Western countries are almost saturated and the West is eyeing our markets? BAHOUS: I'm not sure that saturated is the right word, but definitely their markets are much more advanced than ours in their purchasing of insurance products; insurance expenditure consumes a good part of their spending budgets. Definitely, in our part of the world, spending on insurance is not much and the market penetration of insurance into the general public is much lower due to cultural and practical difficulties which we need to overcome. If we combine the current premium of all of the MENA region markets, it will add up to a small percentage of the European market. When entering our markets the multinationals see the potential of growth considering future opportunities; they look at diversify their exposures and increase their income. The MENA region still has a good potential to grow and generate good income. The split between life and general insurance BL: Is awareness the responsibility of the private sector or of the public sector? BAHOUS: I think it's the responsibility of everybody because the community interacts at different levels so it needs the involvement of all. The local governments are indirectly doing their part; for example with the introduction of compulsory medical insurance in Saudi Arabia, the general public now understands the role of insurers in providing the cover and people now compare and understand the various benefits offered by insurers. The private sector and other parts of the community should also do its part. The insurance industry is prospering and should invest in education and making the public aware. A good awareness publicity is when insurance companies treat their clients fairly, pay their claims fairly and meet their obligations. What is also needed is investment at the educationallevel, in introducing insurance to the young generation. BL: Is it true that a number of the heads of Insurance companies don't master the technicalities of Insurance? BAHOUS: It would be good if the CEO had the technical skills but its not true 12 BUSINESS LIFE MARCH 2012

5 that he should be a technician. A good CEO should know what the business is about, understand its workings, he should be a good leader and manager, possess good public relations traits and be able to communicate and represent his company well. The CEO would have technicians working with him to deal with technical issues. The CEOs of most multinationals came from the financial sector. If it happens that a CEO is combining technical knowledge with all of the other traits then that would be great, but I wouldn't say that it's a must to have. We have seen some of the CEOs in our region, who came from the financial sector, and have done well for their companies. BL: How far has the financial crisis had an Increasingly visible impact on the insurance industry and specifically on their investment portfolios? BAHOUS: It all depends on the markets the companies are in; the financial and political environment could be a factor that prevents companies from achieving their objectives. It would differ from country to country. Companies working in the GCC are in a better position than those working in other countries of the region, since for some, the financial and political problems are major. The GCC is also in a better position than many of the Western countries where the financial crisis is huge. As mentioned earlier the international (Re) insurers have lost a good part of the investment income and now their focus is again towards achieving technical profit. Daily, we receive reports from rating agencies downgrading the rating of major companies simply because of their exposures to investments in economically troubled European countries. Companies working in the GCC are in a more privileged situation than the rest of the MENA countries because the GCC still provides a stable economical and political environment. BL: What are the plans for the year 2012? BAHOUS: We have aggressive targets for the year 20r2 in all of the markets we operate in and I believe that these plans are achievable. We are starting new operations in new territories and strengthening our existing operations. We're considering new projects that layout our vision for the future. We got the provisional approval and now we are going through the final licensing stage to start a broking operation in Oman, and we've already started recruiting employees. In UAE, we have existing operations in Dubai and Abu Dhabi which we are strengthening their position in the market by hiring additional staff and allocating resources to support it from our head office. In other areas, we're basically strengthening the human resources element. Towards the end of 20ll, we were able to recruit around ten senior executives despite the tough recruiting situation in the region. I am optimistic that we will achieve the set targets because we have what it takes to succeed. BL: What about Libya? Don't you think it's a potential market? BAHOUS: Libya is an oilrich country that is undeveloped. The country needs lots of investments in its infrastructure, buildings, industries, hospitals and oil production facilities. The potential for business there is huge and it's a rich country, however much will depend on the political developments there. As an Arab-based company we cannot ignore any Arab market, however, starting an operation there now is not on the agenda. BL: Is the vision of ACE Group to be a regional or an international company? Is your target and vision to focus mainly on this part of the world? BAHOUS: As a group we aspire to expand outside the region; however we have to first strengthen our Arab presence. We have to be satisfied that we have a strong status in each of the markets we operate in. We are focusing on the business we do in the region and when the time is right or opportunity arises we shall not miss the opportunity to grow outside. BL: What about your operations in Lebanon? BAHOUS: We have a small-size operation in Lebanon, and we have plans and intentions to develop the Lebanese business. Whilst the situation in Lebanon has been fluctuating up and down, the group has maintained a presence there since the early 70S. Whilst our portfolio is small, the operation has always generated profit and we aim to strengthen and support the operation in Keen to contribute to the success and growth of the group: Nagib M. Bahous, President and Chief Executive Officer of MIG Holding The Insurance Holding Company of the Mawarid group Lebanon to increase revenue and profit. BL: How does ACE Group handles its businesses in Saudi Arabia and what are the group's ambitions? BAHOUS: In the Kingdom of Saudi Arabia, ACE has three companies, a broking company, an agency company and a consultancy company with head offices in Riyadh and branches in the major cities. The lead operation is broking. ACE has been operating in Saudi Arabia since r952, so it has its history, it has a substantial base of good clients, it has an excellent reputation, and I believe ACE dominates the broking market in Saudi Arabia. ACE deals with all of the top insurance companies operating in the Saudi market. The focus of business has been and will continue to be the corporate clients where ACE has a long experience in handling and servicing. BL: What about the operations of Bahrain which you lead? BAHOUS: In the Kingdom of Bahrain, we just started our operations, we took a broking license toward the end of last year and it's really doing very well. I'm not involved with operations anymore; I look after shareholders' interests in the various companies that the group owns or has investments in. BUSINESS LIFE MARCH 2012 l3

An IFC Reports Interview with. Mr. Tawfik Al Bahar, Managing Director, Warba Insurance, Kuwait. For our special report on Kuwait

An IFC Reports Interview with. Mr. Tawfik Al Bahar, Managing Director, Warba Insurance, Kuwait. For our special report on Kuwait An IFC Reports Interview with Mr. Tawfik Al Bahar, Managing Director, Warba Insurance, Kuwait On the 26 th April 2011 For our special report on Kuwait 1 IFC REPORTS: His Highness the Amir has continuously