EghtesadOnline: Iran’s reinsurance deals with foreign counterparts are not in danger of being revoked when US sanctions snap back in a maximum of six months, the chief executive of Iranian Reinsurance Company said.
“Not many deals were signed with foreign counterparts during the past two-and-a-half years and the number of deals that were signed are not so high that foreign companies would want to cancel them,” Seyyed Mohammad Asoudeh also told IBENA.
When US President Donald Trump recently announced that he is withdrawing from the Joint Comprehensive Plan of Action, the formal name of Iran’s nuclear deal with world powers, he also cast doubt over Iran’s new reinsurance deals with foreign counterparts as he did with other international ties of the country.
In late July 2017, more than a year into the implementation of JCPOA, Germany’s Munich Re, the world’s largest reinsurer, became the first foreign reinsurer to start working with Iran after the lifting of international sanctions in January 2016 and signed a contract with Saman Insurance Company affiliated with Bank Saman, according to Financial Tribune.
“Based on the contract, risks in life insurance and capital formation categories are reinsured by Munich Re,” Ahmadreza Zarrabieh, Saman CEO, said at the time.
Shortly after, the Central Insurance of Iran, the industry’s regulator and its largest reinsurer, announced in early October 2017 that it has reached a much-anticipated agreement with France’s SCOR SE, based on which the major reinsurer will cover the catastrophe excess of loss reinsurance for Iran.
The deal was important in that it opened the country’s lucrative insurance market, which is said by Iranian officials to have a risk coverage potential of over $3 trillion, to foreigners. Its significance is also borne by the fact that Iran is vulnerable to earthquakes and other natural catastrophes, the last of which shook the country last year, killing over 500 people.
On the back of the CII framework deal, Mellat Insurance Company, affiliated with Bank Mellat, reached a catastrophe excess of loss coverage deal with SCOR for up to €200 million.
Mellat in early May announced that it has signed the country’s second contract with Munich Re, based on which the German reinsurer will cover the entire life insurance portfolio of the private Iranian insurer.
However, the Iranian Re chief executive said the deals have “limited value” in light of the fact that transfer of money remains Iran’s biggest problem in enacting major deals with foreign reinsurers.
Concerning the excess of loss reinsurance deal, Asoudeh said “losses have been covered, but no loss has materialized yet”.
Iranian Re, affiliated to Bank Pasargad, has also been trying to link up with a number of major international reinsurance companies. The company announced in December 2017 that it is negotiating with SCOR SE, Partner Re and Nasco Insurance Group, but no other news has been published on that front.
On Tuesday, Iran’s insurance industry took its first hit on the international scale when Reuters reported that Germany’s Allianz, which had a contract with Parsian Insurance Company whose details were not publicized, is preparing to wind down Iran-related business due to possible US sanctions.
“We are developing wind-down plans for relevant business to ensure appropriate termination within the defined periods,” an Allianz representative said, while adding that the insurer was also “waiting for and will consider any guidance that the EU and the German government may provide”.