EghtesadOnline: The government has approved divesting 14% of its shares in Amin Re by the end of the current Iranian year (March 20), announced Amin Re’s chief executive.
Mostafa Kiaei also told a press conference earlier this week that the measure would help boost his company’s performance.
“Iran Foreign Investment Company, owned by the government, owns 14% of the shares in Amin Re, and the government has recently approved the divestment of IFIC’s shares in Iran Fara Bourse,” he said.
The measure put forward by Economy Minister Ali Tayyebnia was approved by the Cabinet and declared by First Vice President Es’haq Jahangiri in early January, Financial Tribune reported.
Back in December, Majlis required the government to forgo its shares in insurance companies, except for the Central Insurance of Iran–the industry’s regulator–and Iran Insurance Company–the sole insurance firm fully owned by the state.
Kiaei said Iran Privatization Organization will announce more details of the measure in the coming weeks, although “we prefer to sell the shares to foreign insurers and entities”.
As per the law, foreigners are permitted to own up to 40% share in insurance firms located on the mainland. However, they are allowed to fully own insurance firms located in free trade zones.
The Central Insurance of Iran is expected to bar general insurers from accepting reinsurance risks from the next fiscal year.
Kiaei said such a decision would make Amin Re’s shares more appealing to general insurance companies.
“Currently, the Central Insurance of Iran and Iran Insurance Company collectively control 90% of the Iranian reinsurance market. But the CII is more flexible in its operations as in some cases it has transferred a portion of risks to Amin Re,” he said.
The CII, as the industry’s regulator, defines a cap for insurance and reinsurance firms over accepting reinsurance risks at the beginning of every fiscal year. The CII has been repeatedly criticized for being involved in commercial activities, but the regulator says its reinsurance activities are necessary for supervising the market.
Amin Re, established in 2003, is among a handful of insurance firms licensed to operate in free trade zones. The firm is jointly owned by Iran Insurance Company, Dana Insurance and IFIC.
Elaborating on plans for boosting Amin Re’s performance, the official said, “We will finalize the company’s recapitalization by the yearend, raising Amin Re’s capital from 1.5 trillion rials ($40 million) at present to 2 trillion rials ($52.6 million).”
Kiaei said the government has required reinsurance firms to raise their capital to at least 4 trillion rials ($103.6 million).
“Moreover, we want to recapitalize in order to be rated by international firms like AM Best,” he added.
Amin Re’s chief executive also noted that his company has managed to join the International Insurance Society as the first Iranian company, which allows the firm to improve its technical knowledge in collaboration with major international reinsurers.
Kiaei welcomed CII measures for enhancing reinsurance ties with major reinsurers, including Munich Re.