Saudi the ‘main driver’ for Dubai business – IGI’s Labat

International General Insurance (IGI), the specialty insurer and reinsurer, is looking to Saudi Vision 2030 and its associated construction boom to power its regional growth in the next few years.

Operating through the Dubai International Financial Centre (DIFC), IGI’s regional reinsurance business is prioritising facultative business over treaty, due to fierce regional pricing competition for the latter in the Middle East.

Much of this business already comes from Saudi Arabia, and this is set to intensify, as the Kingdom sets about its ambitious plans to grow and diversify its economy from its traditional reliance on energy revenues.

“For us clearly the main driver is Saudi Arabia within this region. This is all part of the Saudi Vision 2030,” says Henri Labat (pictured), senior executive officer IGI Dubai, tells GR.

“Everybody’s talking about Neom, which is a new city being built over the next six years. We are already involved in some business but to give you an idea, over the next six years, investment coming in for Neom’s constitution is around $350bn,” he says.

It is not just about Neom. A lot of other construction and infrastructure developments are taking place across the country.

“There is a lot of development around the Red Sea, with the goal of it becoming more of a tourist destination. So, you have a lot of hotels and resorts being built over there,” Labat says.

“There is another major development at Alula. There is around $50bn of investment to transform this area, with hotels and developments, to become a tourist destination,” he explains.

Nor are the opportunities restricted to construction, but a number of new lines of business that have historically not been big drivers of re/insurance premium from Saudi.

“Saudi is becoming very active in terms of events, such as their well-publicised Football League, and hosting big boxing matches and a lot of concerts, all of which is driving re/insurance demand. Event cancellation is becoming something important in Saudi Arabia, which is new for the market,” he says.

Financial lines, such as directors’ and officers’ liability (D&O), and liability linked with mergers and initial public offerings, is also a major source of demand.

“The Saudi stock exchange is growing, with a lot of IPOs within the past year or two. That has driven demand for POSI and D&O policies for these new listed companies,” Labat says.

He leads IGI’s operation from the DIFC, with more than 20 lines of business as a company, and a mandate to operate across Middle East markets, Turkey to the west, as well as Central Asia to the east, with projects in Azerbaijan, Kazakhstan and Uzbekistan.

Although smaller in size, Qatar is another source of growth in the region, he emphasises. This relates particularly to liquefied natural gas (LNG), which has made the Gulf state rich in recent years and is now sought after by European countries scrambling to find new energy suppliers.

Qatar is building huge infrastructure, with LNG terminals as well as new exploration and production,” says Labat.

“European economies, such as Germany and France, were previously dependent on Russian gas. They are trying to find new sources of natural gas, and an alternative to solve their energy needs is Qatar,” he says.

“We’re talking about more than $100bn of investment in the gas industry in Qatar over the next five to six years. So, if Saudi Arabia is number one, then Qatar is number two,” he adds.

Closer to its DIFC base, the UAE’s economy is also seen as a major driver of growth.

“The population is growing a lot, and to continue to attract that expatriate population, we’re going to see new developments, more construction and demand for infrastructure,” he says.

All of this comes despite the geopolitical headwinds faced by the region in 2024.

“The momentum is there in the region, despite crises, such as the Gaza War. We’re very optimistic about the prospects for GCC markets,” Labat adds.

He expects much of the growth to come via facultative business, for which IGI has more appetite in the region, due to strong competition keeping prices down on treaty reinsurance.

“It’s a hardening market for treaty reinsurance everywhere in the world, except for this region. For the Middle East region, we have more appetite for facultative reinsurance than for treaty, because competition on treaties is too high, and the resulting margins we see available are very tiny,” he says.

Saudi regulatory rules require the local market be offered up to a 20% share of treaty reinsurance business before it is passed to the international market. However, this rule doesn’t apply to individual risks reinsured on a facultative basis.

“The Saudi market gives the incentive to go the local market first, but the size of the business or the type of products mean it still needs the international market,” Labat says.

“For event cancellation, for example, the local market doesn’t have the knowledge or the capability to do this, so they need to go into the international market. For construction, in view of the amount of capacity required, the local market isn’t anywhere near enough,” he adds.

African construction and energy projects

IGI operates another regional hub from Casablanca, which is led by Youssef Belghiti Alaoui, CEO, IGI Casablanca

This Casablanca office underwrites IGI’s African treaty reinsurance business, from Morocco to South Africa, mainly excess-of-loss, but also facultative business, particularly property, construction, casualty lines, marine and energy, aviation, and political violence (PV), plus some niche products such as contingency and event cancellation.

“There is big growth now in North Africa, particularly infrastructure projects in Algeria. Morocco as well, where they’re organizing the World Cup, along with Spain and Portugal, in 2030,” Alaoui says.

“We’ve already seen a stadium tender. We also have construction projects to build desalination plants, because in recent years Morocco has had very little rain,” he adds.

He sees opportunities across the continent, particularly for energy, construction and liability business.

West Africa is a major energy opportunity, with a new pipeline planned from Nigeria to Morocco and then to Europe, providing European countries with another energy supply route.

“North Africa and Nigeria are the top boomers. We have a gas pipeline project between Nigeria and Morocco, which is huge. It’s going to Europe, through every country in West Africa,” Alaoui says.

IGI gained its Moroccan reinsurance licence nearly a decade ago, in December 2014, to start underwriting officially from January 2015, which is when Belghiti joined the company.

“During the first two years, we did a lot marketing and traveling to introduce IGI Casablanca to the African markets. After the second year, we started visiting the regional insurance hubs, like Johannesburg, Nairobi, Mauritius, and Paris for the French-speaking African countries,” he says.

“We have local presence and local knowledge, which is very important. We train our local underwriters according to the London market techniques, so they are all highly technically qualified. It’s a competitive advantage for IGI to bring that local experience in the region,” Alaoui adds.