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For wealth management organizations in the Middle East this is a time of great change, and great opportunity. The industry enjoyed a resurgence last year, with growth in both the absolute number of local and expatriate high net worth investors, and the assets of this target client pool. Meanwhile, last year assets under management rose by 15%, taking the total managed in the region to approximately US$4tn.

However, the improving environment is no rising tide that will carry every wealth manager with it. In the post-financial crisis world, supervisory authorities and investors are becoming more demanding about how assets are managed. The upshot is wealth managers will have to wrestle with a combination of evolving regulation, less stickiness of client assets with flows between managers increasing, tougher fee negotiations, transaction volume reductions, and an investor shift towards lower margin products.

To benefit from the potential opportunities, therefore, investment firms will have to demonstrate to existing and prospective clients that they can provide a compelling value proposition built around exceptional service and robust investment performance. Only by meeting—
and preferably exceeding—clients’ expectations will they be able to grow their assets under management and revenues over the long term. Furthermore, firms will have to run their businesses ever more efficiently if they are to reduce costs and improve profitability.

This white paper will set out the challenges facing wealth managers in the Middle Eastern region, and explain how those wealth managers that can marry their interests with those of their clients by leveraging the proper skills and support infrastructure can develop a winning formula.

This Advent Software white paper – Wealth management
trends in the Middle East looks at:

• Regulatory Reforms
International reform agenda
Middle East developments
Wealth manager implications

• Differentiating Service
Transparency and communication
Analyze and optimize portfolio performance
Risk management
Client reporting
Improve service delivery

Brazil iron ore startup Manabi files to sell stock

RIO DE JANEIRO May 16 (Reuters) – Brazil’s Manabi SA, an
iron ore startup which wants to build a mine, pipeline and port,
said Wednesday that its board has applied to the Brazilian
securities regulator for approval to sell stock in Brazil,
Canada and the United States.

No amount for the sale was given, according to a statement
filed with the regulator, known as the CVM. According to other
company documents on file with the CVM, the company hopes to
complete its financing plans by the end of the third quarter of
this year.

The Brazilian and U.S. stock sales are to be managed by
Credit Suisse Group AG, Banco Itau BBA SA and Goldman
Sachs Group Inc..

The Canadian sale will be managed by Credit Suisse, Goldman
Sachs and by Bank of Montreal’s Nesbitt Burns unit.

Manabi expects to begin major construction in the first
quarter of 2012, with the mine in Minas Gerais state due to
start commercial production in the third or fourth quarter of
2015, the documents said, without saying how much the firm plans
to produce.

Manabi is 60 percent owned by Brazil’s Fabrica Holding Ltda.
and 40 percent by U.S. based IronCo LLC.

The company also has non-voting, preferred stock investors
who have agreed to buy shares in a private placement. These
include the Ontario Teachers Pension Fund, and Korea Investment
Corp, according to a shareholders’ agreement.

Ontario Teachers has been an investor in several other
Brazilian iron ore ventures including MMX Mineracao e Metalicos
SA, controlled by Brazilian billionaire Eike Batista.

Hollande makes nervous debut in capital of austerity

BERLIN May 15 (Reuters) – France’s new president, Francois
Hollande, looked understandably nervous on Tuesday at his first
meeting with Angela Merkel, as the world looked for signs that
Europe’s new power duo can overcome political differences to
resolve the euro crisis.

The German chancellor tactfully guided her guest through the
military honours in Berlin and whisked him off for talks that
had been ominously delayed when lightning struck his plane.

But while both spoke of their determination to keep up the
Franco-German cooperation that flourished under Hollande’s
conservative predecessor Nicolas Sarkozy, it seemed from their
body language that they will have their work cut out.

First fumbling in his pocket for pen and paper to take notes
as the centre-right chancellor spoke at their news conference,
the Socialist president, sworn in only that morning, repeatedly
used hands and arms to stress how reasonable his arguments were.

Merkel, Europe’s most powerful leader for the past six
years, simply shrugged and smiled at reporters when her guest
explained why he wanted to tamper with her fiscal pact, agreed
by 25 European states, to make it more growth-oriented.

Asked if she had any fears about France’s new president,
Merkel laughed it off, saying: “I don’t get afraid very often as
fear is not a good counsellor in politics.”

Merkel and Sarkozy were so different in character that aides
thought they would never get along: she, a physicist from former
East Germany known as “Mutti” (Mum), in baggy trouser suits, an
intensely private home life and a taste for Wagner opera.

Sarkozy, by contrast, was a hyperactive leader married to
singer and supermodel Carla Bruni, a man with such flashy tastes
that his critics dubbed him “President Bling Bling”.

But the two conservatives saw eye-to-eye on the euro crisis
to such an extent that media commentators lumped them together
as a single entity – “Merkozy” – and all it took was a
conspiratorial smile between them in Brussels last year to
signal that Silvio Berlusconi’s days as leader of the euro
zone’s third economy, Italy, were numbered.

The new Franco-German leadership only had 60 minutes to get
to know each other before speaking to the world’s media, but
there seemed to be none of the spark of those Merkozy meetings.

Unlike Merkel, who is already thinking about a third term,
Hollande is a newcomer to global politics who trotted out worthy
cliches about their “common duty” to overcome their differences.

When Merkel said that, when their interpreters were not
translating for them, they had swapped a few words with each
other in English, Hollande said they had spoken “the universal
language” of politics. That drew a thin smile from the
chancellor.

Aides hope similarities in the two leaders’ characters will
help them bridge their political differences.

Hollande, 57, depicted himself as “Mr Normal” during the
election campaign against Sarkozy, whom Merkel publicly
supported. He spoke of wanting to continue doing the family
shopping as head of state and his partner hopes to remain a
working mother.

Merkel, also 57, tries to project a homely image but refuses
to discuss her private life. She rarely appears in public with
her media-shy husband, a chemistry professor.

Dubbed the “Swabian Housewife” by some in a nod to the
thrifty natives of southwest Germany, she might approve of
Hollande’s austere vow to take a 30-percent cut in presidential
pay.

A compromise in Europe’s growth-versus-austerity debate may
be made easier by the fact that both Merkel and Hollande make up
for in pragmatism what they both may lack in charisma.

But the big question may not be whether they can work
together to save the euro: in that, they have little choice.
More pressing for some reporters covering their talks was what
handy nickname could replace Merkozy to signify Europe’s new
power couple. The smart money is on “Merkollande”.

Tepco reports loss as costs soar

Tokyo Electric Power Company (Tepco) has reported a full-year net loss as it struggles with trillions of yen in costs related to the nuclear crisis at its power plant in Fukushima.

The loss was 781bn yen ($9.7bn; Â£6bn) for the year ending 31 March 2012, the company said.

Last week, Japan's government agreed to provide 1tn yen to the utility and take a controlling stake.

The losses were less than the 1.25tn yen loss Tepco posted last year, as the government has taken over much of its disaster-related liabilities, effectively nationalising the company.

For the current fiscal year, Tepco said it expects a third straight annual loss of about 100bn yen.

Tepco has had to sharply increase the amount of fossil fuels it imports after a government mandated shutdown of all nuclear reactors in Japan because of the nuclear crisis.

On Monday, Tepco president Toshio Nishizawa said fuel costs were likely to jump this year because of the lack of nuclear power.

"This increase in fuel cost is based on an assumption that we will have no nuclear power in the year," Mr Nishizawa said.

As part of Tepco's government bailout the utility submitted a business turnaround plan, saying it would make itself profitable again in the year to March 2014.

Part of that plan assumes the government will allow Tepco to restart its Kashiwazaki Kariwa nuclear plant, the world's biggest, from April 2013.

Tepco also submitted a request last week to raise electricity rates for households and small users by an average 10% from July.

There has been a leadership change as well – Naomi Hirose, who was in charge of overseeing compensation for victims of the nuclear disaster, will take over as president in June.

Franchising 2012 Outlook: Better Than 2011 Reality

By SARAH E. NEEDLEMAN

The number of U.S. franchises declined for the third consecutive year, falling by a modest 0.6% in 2011, according to a new report commissioned by the International Franchise Association.

“There was a greater contraction in the number of businesses than we anticipated,” said Steve Caldeira, president of the IFA, the franchising industry’s largest trade group.

Getty Images

Mr. Caldeira said in an interview with the Wall Street Journal that a lack of access to credit “probably was a factor,” in the decline this year. “We may have underestimated the potential significant downward impact,” he added.

In January, the IFA, the franchising industry’s largest trade group, had forecast 2.5% growth this year for the sector. Employment at franchises rose just 1.9% in 2011 compared with IFA’s previous forecast of a 2.5% increase.

The IFA has used different research firms for its recent reports, it said. Its 2011 forecast, released in January, was prepared by PricewaterhouseCoopers, while its 2012 forecast, released Monday, was prepared by IHS Global Insight, a unit of IHS Inc.

IHS Global said that it expects U.S. franchise establishments to increase in 2012, by 1.9%. It also expects franchise businesses to boost hiring and sell more goods and services in the year ahead.

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Lodging, business services, and personal services are expected to see the most growth in 2012, it said.

Quick-service restaurants are expected to continue to make up the bulk of franchise establishments in operation next year (21%). They are also likely to provide the greatest number of jobs (37%) of all franchise categories, and to generate the most revenue (26%).

IHS says its outlook is based on modest improvements made over the past year in small-business lending, as well as signs that the overall U.S. economy is on the mend, such as the lowering of the national unemployment rate.

The forecast also presumes that the payroll tax cut for employees will be extended.

Stephen Bronars, a senior economist with Welch Consulting in Washington, D.C., said in an interview that he believes the new IHS/IFA study may be “overly optimistic” because the health of franchising’s largest sector, quick-service restaurants, is directly tied to consumer discretionary spending. “It will depend on what happens to housing prices and consumer sentiment,” he said. “Are people going to go out to eat and take vacations? What’s going to happen to the price of gasoline?”

Franchises in some parts of the country are less likely to see a rebound than those located elsewhere, he added. “States like Nevada and California, where real estate values declined and the economic downturn had the biggest negative impact, will have to rebound a lot in the next year for this optimist forecast to come true,” he said. “People have lost money on their houses and aren’t as wealthy as they used to be.”

In a survey earlier this month of 149 IFA members, more than one quarter of franchisees said they expect a “moderate improvement in access to credit” over the next 12 months, compared with just 6.3% who said this in a November 2010 survey.

Among franchisers, 55% said they expect a “moderate improvement in access to credit” in the year ahead, up slightly from 53% who said the same in November 2010.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

Murdoch Bats Away ‘Myths’ at Inquiry

By CASSELL BRYAN-LOW, JEANNE WHALEN and DANA CIMILLUCA

LONDON—News Corp.

Chairman and Chief Executive Rupert Murdoch on Wednesday faced a recitation of criticisms that have piled up at his door during a long career, including allegations that he uses his company’s newspapers to collect political favors and push his commercial interests.

Mr. Murdoch’s reply: They’re all “myths.”

The 81-year-old mogul appeared Wednesday before a judge-led public inquiry into press ethics that is examining the use of illicit reporting tactics in the media and allegations that journalists are too cozy with politicians.

News Corp. Chairman and CEO Rupert Murdoch faced questioning Wednesday before a press-ethics inquiry about whether he used the company to call in political favors and push his commercial interests. Bruce Orwall has details on Lunch Break. Photo: AP.

Recap: Murdoch’s Testimony

Follow the Journal’s London bureau on Twitter

In four hours of testimony under oath, Mr. Murdoch repeatedly said that he hadn’t asked prime ministers, or would-be prime ministers, for favors and said his commercial interests didn’t influence where his newspapers stood on issues or political parties.

Wednesday’s appearance—which covered a wide swath of Mr. Murdoch’s career, but not much of his company’s recent scandals in Britain—was likely a prelude to a return visit on Thursday. Then, Mr. Murdoch is expected to face questioning about the long-running phone-hacking scandal that has battered the company and prompted the government to establish the inquiry.

On Wednesday, Mr. Murdoch conceded “abuses” had occurred at his company, referring to both phone hacking and other illicit reporting tactics. But he also distanced himself from some of the activities: “We have a very large company and I do run that company with a great deal of decentralization.”

The appearance came the day after his son James Murdoch, News Corp.’s deputy chief operating officer, was grilled about allegations that the company was too close to Jeremy Hunt, the British government minister who oversaw a regulatory review of what would have been the company’s biggest deal ever—its effort to gain full control of British Sky Broadcasting Group PLC.

That dust-up claimed a political casualty Wednesday when Adam Smith—a special adviser to Mr. Hunt—resigned over his role in the regulatory consideration of the BSkyB deal. Emails between Mr. Smith and a News Corp. aide suggested a tight alliance between the two sides while the BSkyB deal was under review.

In his resignation, Mr. Smith said he’d created a perception that News Corp. had “too close a relationship” with the government.

Mr. Hunt, meanwhile, received the “full support” of U.K. Prime Minister David Cameron in Parliament on Wednesday.

News Corp. also owns The Wall Street Journal.

At Wednesday’s session, the inquiry’s lead questioner, Robert Jay, led Mr. Murdoch through the company’s publishing history in Britain, which dates back to its 1968 acquisition of the News of the World.

Mr. Jay asked Mr. Murdoch about often-cited criticisms that he has allegedly sought to use his sizable media presence in the U.K. to influence politicians, spanning from Margaret Thatcher to Mr. Cameron, to get favorable decisions on commercial matters.

“I’ve never asked a prime minister for anything,” said Mr. Murdoch during his testimony, which was peppered with pauses as he appeared to be answering carefully.

Mr. Jay pressed Mr. Murdoch on his endorsement of Mr. Cameron and his Conservative Party in the 2010 election just before News Corp. launched its BSkyB bid. Specifically, Mr. Jay asked the media mogul whether the endorsement was motivated by a desire to install a government that he thought would be friendly to approving the BSkyB deal. Mr. Murdoch dismissed the assertion as “a complete myth.”

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rupert0425

Associated Press

In this image from video, News Corp. Chairman and Chief Executive Rupert Murdoch appears at the Leveson inquiry in London on Wednesday.

“We’ve never pushed our commercial interests in our newspapers,” Mr. Murdoch added.

Mr. Jay also asked Mr. Murdoch if he influences his editors indirectly. There are perceptions among some people, Mr. Jay said, that underlings need to be cautious about taking a different view than Mr. Murdoch’s.

Mr. Murdoch replied obliquely: “I do try very hard to set an example of ethical behavior and make it quite clear that I expect it…. But do I have an aura or charisma? I don’t think so.”

Some of those who have done battle with Mr. Murdoch over the years disputed elements of his accounts. Mr. Murdoch testified that, after the Sun withdrew its support for then-prime minister Gordon Brown in 2009, Mr. Brown told him that News Corp. had “declared war on my government and we have no alternative but to make war on your company.” Mr. Brown shot back Wednesday afternoon that Mr. Murdoch was “wholly wrong” and that he didn’t speak to the News Corp. executive about the decision.

During the testimony, Mr. Murdoch, asked about editorial independence at his papers, said Harold Evans, former editor of The Times who left in the 1980s, once behind closed doors asked him what he wanted him to say in the paper. Mr. Murdoch recounted that he said,” ‘Harry, that is not my job,’ ” Mr. Murdoch also said that Mr. Evans faced a staff insurrection.

Mr. Evans on Wednesday blasted Mr. Murdoch’s testimony, writing online in the Daily Beast, “Political independence was only one of the promises he made and broke.”

The Murdochs’ appearances this week mark another dramatic moment in a long-running scandal sparked by revelations that News Corp.’s now-closed News of the World tabloid illegally intercepted the voice mails of celebrities, politicians and crime victims in pursuit of scoops. The scandal has snowballed to include other allegations of wrongdoing, including bribing public officials and hacking emails, and have spread to other News Corp. media outlets.

“I feel great personal regret that we did not respond more quickly or more effectively,” Mr. Murdoch said in a witness statement released by the inquiry. Wednesday was Rupert Murdoch’s second public appearance in the U.K. in the wake of the phone-hacking scandal; last summer, he appeared before a committee of politicians but wasn’t under oath.

News Corp. has publicly apologized for wrongdoing at the tabloid and has said it is assisting police, who are conducting various criminal probes into illegal reporting practices.

Mr. Murdoch said he had close contact with the daily tabloid the Sun, but sought to distance himself from its former sister publication, the weekly News of the World, saying he personally hadn’t devoted much time to it—something he regretted.

There was also the occasional lighthearted moment. He was asked whether he recalled allegedly telling Tony Blair, prior to him becoming prime minister, that if their “flirtation” was ever consummated “I expect we would end up making love like porcupines–very, very carefully.”

Laughing, Mr. Murdoch acknowledged he might have said that.

—David Enrich contributed to this article.

Write to Cassell Bryan-Low at cassell.bryan-low@wsj.com, Jeanne Whalen at jeanne.whalen@wsj.com and Dana Cimilluca at dana.cimilluca@wsj.com

A version of this article appeared April 26, 2012, on page B1 in some U.S. editions of The Wall Street Journal, with the headline: Murdoch Bats Away ‘Myths’.

UPDATE 2-JPMorgan execs expected to leave over loss-sources

May 13 (Reuters) – JPMorgan Chase & Co is expected
this week to accept the resignation of Chief Investment Officer
Ina Drew after the bank lost $2 billion or more with a failed
hedging strategy using derivatives, sources close to the matter
said on S und ay.

Two of Drew’s subordinates who were involved with the
trades, Achilles Macris and Javier Martin-Artajo, are expected
to be asked to leave, according to the people familiar with the
matter.

Drew had repeatedly offered to resign after the bank
discovered that its portfolio of derivatives tied to bonds was
rapidly losing money and had grown too big to be quickly unwind,
according to one of the sources. But the resignation was not
immediately accepted because of her past performance at the
bank.

Until the $2 billion loss was disclosed on Thursday night,
Drew was considered in the industry to be one of the best
managers of balance sheet risks.

She is one of the highest paid executives at JPMorgan,
earning more $15 million in each of the last two years.

“Ina is an amazing investor,” said a money manager who knows
Drew, but who declined to be quoted by name. “She’s done a
really good job over a lot of years. But they only remember your
last trade.”

CEO Jamie Dimon said when he announced the loss on Thursday
that the bank was continuing to investigate what went wrong and
that disciplinary actions would be taken.

Dimon called the handling and oversight of the derivative
portfolio “sloppy” and “stupid.”

Earlier on Sunday, Dimon said in a nationally-televised
interview that bank executives had reacted badly to warning
flags last month that it had large losses in financial
derivatives trading.

In the interview on NBC’s “Meet the Press” television
program, Dimon said bank executives were “completely wrong” in
public statements they made in April after being challenged over
the trades in media reports.

“We got very defensive. And people started justifying
everything we did,” Dimon said. “We told you something that was
completely wrong a mere four weeks ago.”

The loss, and Dimon’s failure to abide the warnings, have
become major embarrassments and have given regulators new
arguments for tightening controls on big banks and requiring
them to hold more capital to cushion possible losses.

The comments to NBC were Dimon’s first public statements
since he spoke to analysts in a conference call on Thursday. He
is scheduled to speak again on Tuesday at the company’s annual
meeting in Tampa, Florida.

US WCoast Products -Prices steady after recent gains

HOUSTON May 11 (Reuters) – Gasoline premiums on Friday
retained the high levels hit on Thursday due to the halted
restart of BP Plc’s 225,000 barrel per day (bpd) Cherry
Point, Washington, refinery, traders said.

In the Los Angeles spot market, unleaded May CARBOB gasoline
was even with Thursday’s finish at a 55-cent-per-gallon premium
on top of June NYMEX RBOB gasoline.

Gasoline in the Portland, Oregon, market finished at 72
cents on top of the June NYMEX RBOB.

Back in the L.A. market, June gasoline retreated 6 cents to
a 34-cent premium on the July NYMEX RBOB.

Diesels edged up with Los Angeles spot market CARB diesel a
penny stronger at 11 cents over June NYMEX heating oil.

Portland diesel sold at 34 cents a gallon over NYMEX heating
oil, even with Thursday.

Beware of ‘Leveraged’ ETFs

By JOE LIGHT

Despite years of warnings about the dangers of “leveraged” exchange-traded mutual funds, many small investors—and, apparently, some investment professionals—may still not be getting the message.

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LEVETFS

Associated Press

Morgan Stanley was fined for improperly selling leveraged ETFs.

Earlier this month, the Financial Industry Regulatory Authority fined brokers including Citigroup Global Markets, Morgan Stanley,

UBS Financial Services and Wells Fargo Advisors for improperly selling leveraged and inverse ETFs.

A Citi spokeswoman said in a statement the company is “pleased to have this matter resolved.” The other firms said in separate statements that they have bolstered their supervisory procedures since the violations occurred in 2008 and 2009.

Leveraged ETFs seek to magnify the performance of the indexes they track—for a single day. Inverse ETFs try to achieve the opposite performance.

For example, the ProShares Ultra S&P 500

exchange-traded fund seeks to deliver twice the daily performance of the Standard & Poor’s 500-stock index. If the index rises 1% in a day, the ProShares ETF should rise 2%; if the index falls 1%, the ETF should fall 2%.

But while leveraged ETFs can be useful in some situations, they are expensive and can be harmful to small investors who hold them for longer than a day, say advisers and researchers who have studied the products.

“The long-term investor has no need to be in these products at all,” says Rick Ferri, founder of Portfolio Solutions, an investment adviser in Troy, Mich.

When the ETFs launched in the mid-2000s, many small investors looking to pump up their returns missed an important wrinkle. Because of daily compounding, long-term investments in leveraged ETFs don’t mirror the indexes the funds tracked.

For example, ProShares Ultra S&P 500 lost 0.83% on Tuesday, about double the loss of the S&P 500. But over the past five years, the ETF has lost about 9% annually, and the index has been flat.

All told, there are 275 leveraged and inverse ETFs with nearly $33 billion in assets, according to tracker IndexUniverse. The biggest, as of this past week, included Direxion Daily Financial Bull 3x,

with nearly $1.4 billion, ProShares UltraShort 20+ Year Treasury,

with $3.4 billion, and ProShares UltraShort S&P 500, with just over $2 billion.

The ETFs are used mainly to make extremely short-term bets or to temporarily hedge market exposures. Such activities are best left to big institutional investors, Mr. Ferri says.

Leveraged ETF providers make the risks clear on their websites and in prospectuses—in some cases warning that holding the ETFs for longer than one day will result in losses. Before those disclosures, many investors and some advisers held them for months at a time, Mr. Ferri says.

The daily compounding issue is magnified during periods of high volatility. In 2011, an investment in the ProShares ETF would have lost nearly 3%, even though the S&P 500 gained more than 2%.

What’s more, the products are expensive, notes Jeffrey Bogart, a registered investment adviser at Bogart Cunix & Browning in Mayfield Heights, Ohio. Direxion Daily Financial Bull 3x, which tries to triple the daily performance of the Russell 1000 Financial Services index, has an expense ratio of 0.95%. ProShares Ultra S&P 500 costs 0.92%. ETFs that track major indexes without leverage can cost 0.1% or less.

Even after accounting for the compounding issues and costs, during periods of high volatility some leveraged ETFs still fail to perform as expected, says Pauline Shum, director of the Master of Finance program at the Schulich School of Business at York University in Toronto.

It is difficult for retail investors to calculate the net asset value of the contracts that underlie the ETFs, and in the past, leveraged ETFs’ share prices have deviated significantly from the value of the underlying assets, Ms. Shum says.

“When things are out of whack, the market becomes temporarily inefficient,” she says.

Other research has shown that leveraged ETFs might lose several percentage points of return from the costs incurred to maintain the leverage. Leveraged-ETF providers have to rebalance their portfolios daily to keep the proper amount of leverage, says Marco Avellaneda, a professor at New York University and a partner at Finance Concepts, a risk-consulting firm.

Leveraged ETFs’ mandates are publicly known—that is, a leveraged financial ETF needs to own the assets and derivatives necessary to double the index’s return. Prof. Avellaneda’s research has shown that when ETF providers try to execute the trades needed to support the ETFs, they get poor prices for the contracts and assets they have to buy.

Prof. Avellaneda says that might be because of their publicly known mandate, or because the orders they execute are so large, among other reasons. The result can be a hidden cost of as much as five percentage points of return annually, according to Prof. Avellaneda.

“If you know I’m the leveraged-ETF guy, you know which side of the trade I have, and that’s going to move your asking price up,” he says.

With all that in mind, there are almost no circumstances in which a small investor should trade leveraged ETFs, says Mr. Bogart: “It’s asking for trouble.”

Summit opens on kingdom’s insurance boom

Saudi Arabia’s newly liberalised insurance market comes under the spotlight this week with estimates that a market currently worth around $1.5 billion annually could soar to $8 billion within 10 years.

An elite speaker faculty of key international and regional professionals will be taking part in the 2nd Saudi Insurance Summit at the Jeddah Hilton Hotel 29-30 October 2007. The Summit, taking place with the approval of the Governor of Jeddah Prince Mishaal bin Majed bin Abdulaziz, is expected to be attended by more than 300 insurance professionals, regulators and key industry players.

The Saudi Arabian Monetary Agency recently reported the insurance market grew 35% in 2006 alone. Gross premiums rose to $1.8 billion from $1.3 billion in 2005. General insurance premiums, which represented 65% of the insurance market, increased by 25% to $1.2 billion in 2006 compared with $959 million in the previous year.

Protection and savings insurance premiums, which represented a mere 3% of the insurance market, went up by almost 16% to $59 million in 2006 compared with $51 million in 2005.

But it is health insurance that is attracting the most attention – representing 32% of the insurance market – and saw premiums increased by 57% to $589 million in 2006 compared with $375 million in 2005. This growth is mainly driven by the decision to make health insurance mandatory for all expatriate workers as well as favourable economic conditions.

New laws require the kingdom’s seven million expatriates to prove that health insurance cover is provided to them by their employers. The first phase demanded compliance from companies with over 500 employees by July this year. Remaining companies have until March 2008 to ensure their workers are covered.

The opening up of Saudi Arabia’s insurance sectors has injected hundreds of millions of dollars into the market with more to come through new company licensing and public offerings.

All insurance companies operating in the Saudi market must obtain a license by March 2008 or cease operations. The capital requirements for gaining a license are $26.67 million for insurers and $53.33 million for reinsurers with an additional 10% statutory deposit. Companies are also obliged to float at least 25% of their shares on the Tadawul and meet other regulatory requirements before receiving a licence.

At present, 18 companies have been licensed, with 24 more expecting to be granted approval.

“The new laws have led many in the industry to forecast excellent growth in the non-life sector in Saudi Arabia with predictions of $4 billion growth by 2009 being touted,” said Deep Marwaha, Senior Conference Manager, of IIR Middle East, organisers of the 2nd Saudi Insurance Summit

“Within this high growth market, the landscape is shifting dramatically,” said Marwaha. “The 2nd Saudi Insurance Summit aims to ensure that key players keep abreast of new developments in what is a breakneck business environment.”

In addition to the two-day Summit, there are two practical workshops. The first is on the principles of Islamic insurance – Takaful structures and Shari’ah compliance, conducted by Rodney Wilson, Director of Postgraduate Studies and Professor of Economics at the University of Durham’s School of Government and International Affairs, UK.

A post Summit workshop – Mind the Gap! How Can We Bridge the Insurance Skill Shortage? – will be led by Ian Wilson, Head of Insurance Programmes at the Institute of Banking, Saudi Arabian Monetary Agency.

Among more than 30 leading international and regional speakers taking part in the Summit will be Dr Muhammad Al Jasser, Vice Governor of the Saudi Arabian Monetary Agency; Ali Al Subaihin, CEO of the Company for Co-operative Insurance (NCCI); Brad Bourland, Chief Economist of Jadwa Investment Company, Saudi Arabia; Tal Hisham Nazer, Managing Director BUPA Middle East; and Dawood Taylor, Group Head, Takaful Ta’awuni, Bank Aljazira, Saudi Arabia.

NCCI are diamond sponsors of the Summit; Medgulf and Bank Aljazira are platinum sponsors; Takaful Re is a gold sponsor; and Salama Co-operative Insurance Company and HiQSys Saudi are silver sponsors.

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Advent Software – Wealth management trends in the Middle East