Kuwait's KIPCO eyes insurance business in Algeria

FUTURE PLANS: CEO says crisis may boost projects' chance of success. (Getty Images - for illustrative purposes only)

Kuwait Projects Co (KIPCO) wants to launch an insurance firm in Algeria this year and move ahead with plans to sell pension products worth up to $500m in the Middle East over the next five years.

Kuwait's biggest investment firm is eyeing retirement funds in Kuwait and Saudi Arabia, tapping a market in which poor elderly people often rely on relatives to support them.

The project will be the first of its kind in the Middle East, and its prospects and those of the Algerian venture may well have been enhanced by the financial crisis, believes the firm's Senior Vice President of Financial Services, Lakhdar Moussi.

"People buy because the need for financial security is something that the current crisis is enhancing," Moussi told Reuters in an interview on Thursday. "The crisis has been positive for the development of such activity."

Moussi said KIPCO wants to take a market share of $500 million, or 10 percent of a $5 billion estimate in total assets for pension products in the Middle East, over the next five years.

"If we are really outstanding, we will try to grasp 10 percent of this ($5bn) in the next five years."

KIPCO will look into partnerships with financial institutions to help set up the funds, he added, but declined to say how much KIPCO is planning to invest or name possible partners.

"We are talking with a restricted number (of potential partners) and we hope to finalise a scheme this year," he said.

In March, Chief Operating Officer Samer Khanachet told Reuters the company had narrowed down talks to two European firms, aiming to attract assets under management worth $5 billion for pension products across the region within five to six years.

KIPCO will also set up an insurance firm in Algeria, which could be used at a later stage as a channel of distribution for a pension fund to be established in the North African country.

"We expect to open a new company in Algeria which will be one of the biggest private insurance companies in Algeria... We capitalized it so as to be eligible for government business," Moussi said, declining to give details.

KIPCO, which owns stakes in 50 companies and operates in 21 countries, will start its pension project in Kuwait this year through its insurance unit Gulf Insurance Co.

After that, it will expand to Saudi Arabia and set up a fund there within 12 months, Moussi said.

"We will start in the GCC (Gulf region), where we have banks branches and insurance companies... and will expand in North Africa through the banks in Algeria and Tunisia," he added. (Reuters)

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