By Eman Goma and Diana Elias
Investment firm plans to sell pension products worth up to $500m in first five years.
Kuwait Projects Co (KIPCO) plans to launch a savings and pensions company in Bahrain with a capital of $25 million, which it said would be the first of its kind in the Middle East.
Kuwait's biggest investment firm plans to sell pension products worth up to $500 million in the first five years of operation of its pensions firm, a KIPCO official said on Monday.
Kipco said it had signed an initial agreement with the world's largest reinsurers Munich Re to provide the new company with technical services and training, a statement said.
In a statement, KIPCO said: "Taka'ud Savings & Pensions will be incorporated in Bahrain and aims to launch its initial product range in selected MENA (Middle East and North Africa) countries by the middle of 2010."
The statement added: "There is a large and unmet demand throughout the MENA region for low-risk, long-term pension products with secure and reasonable returns."
The firm will be operational within three months, and is expected to turn profitable for KIPCO after five years, Lakhdar Moussi, KIPCO's senior vice president of financial services told Reuters.
In the statement, Faisal al Ayyar, vice chairman, KIPCO, said: "Funding retirement is a staggering challenge for regional governments because of the sheer number of people who will reach retirement age during the next 40 years."
He added: "The challenge is so enormous that even the richest countries in the region will find the cost of funding this demographic growth extremely difficult."
The number of people aged over 65 in the region will increase to 32 million by 2030, from an estimated 10.6 million in 2000, KIPCO said, citing United Nations statistics.
KIPCO owns stakes in 50 companies and operates in 21 countries. (Reuters)For all the latest market news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.