Compagnie Algérienne d’Assurance et de Réassurance (CAAR)

Set up on 8 June 1963, shortly after independence, the Compagnie Algérienne d’Assurance et de Réassurance (CAAR) is the first insurance company that is 100% Algerian. Its establishment is considered an act of reconquest of the country’s sovereignty.

Endowed with an initial capital of 600 000 New Francs⁽¹⁾ , CAAR [4] is today employing 1891 staff members and has a network of five branches and more than 138 agencies scattered nationwide.

⁽¹⁾ New Franc: an old currency used in Algeria 64. It was replaced by the Algerian Dinar issued by the Central Bank of Algeria in 1964.

The establishment of CAAR

Before Algeria’s independence in July 1962, the insurance market was composed of foreign insurance companies, overwhelmingly French ones.

Brahim Djamel KassaliChairman and executive manager

Once independence has been acquired, the Algerian State started a vast reorganisation of the insurance sector with the promulgation of new laws aimed at promoting national market. It is within this framework that the first insurance company saw the light of day. CAAR’s mission was to manage legal cession and control insurance operations throughout the country.

Compelled to cede 10% of their portfolio to the new state-owned insurer, foreign companies decided to suspend their activities in the country. Faced with this situation, the Algerian State had no other option but to transfer to the two Algerian companies, operating back then, CAAR and SAA, the portfolios left vacant.

The Société Algérienne d’Assurance (SAA), set up in 1964 by an order dated 12 December 1963, with the status of a mixed Algerian-Egyptian company, had been entirely nationalized in 1966, with the 39% Egyptian stake being acquired by the Algerian State.

CAAR, up against specialization

Durant la période 1973 à 1989, le marché algérien a connu d’importants bouleversements structurels.

During the 1973-1989 period, the Algerian market had been through important structural upheavals. The Compagnie Centrale de Réassurance (CCR), set up in 1973, and whose capital was initially shared between CAAR and SAA on equal basis, benefited a few years later from the monopoly of reinsurance. CAAR has, therefore, entrusted CCR with all of its reinsurance placements.

As of 1973, the Algerian State has imposed specialization of the market. CAAR, consequently, inherits the monopoly of industrial and marine risks. SAA, on its turn, was entrusted with personal lines insurance, mainly the motor class of business.

In 1985⁽¹⁾ , the Compagnie Algérienne des Assurances Marine (CAT), specialised in marine insurance, was set up. CAAR was once again compelled to cede part of its portfolio, that is, the entirety of its marine business.

At the end of that period that came to a close in 1989 with the discontinuation of specialization, CAAR’s operations came to be limited only to property industrial risks.

Opening the sector to private players

In 1995, the Algerian government decided to go for market economy, putting an end to the State monopoly over insurance operations. The sector then opened to private investments. Deregulation results in the arrival of numerous companies whose portfolio is mainly made up of personal lines risks.

With competition in this recent sector getting exacerbated, CAAR was pushed to seek new markets and distribution networks. In this regard, it concluded in 2009 partnership agreements with the three main Algerian banks (CPA, BEA and BNA) that market through their agencies bancassurance products designed by CAAR.

Separating out life and non life activities

The 06-04 law of 2011 has required the separation of life and non life activities. This new provision has pushed CAAR to set up a subsidiary specialized in life insurance.

Named CAARAMA Assurances, the new company is endowed with an initial share capital of 1 billion DZD (13.95 million USD). It started its activities on March 9^th, 2011. By the end of 2015, its turnover amounted to 1.78 billion DZD (16.7 million USD).

CAAR’s privatization

The State, owner of the company at 100%, is now focused on the partial privatization of the company. The consultancy firm EY (Ernst & Young) has been tasked with the coaching of the Algerian insurer as regards this file. The opening of the capital is set at 25%.

This move comes within the framework of a privatization process of state-owned companies initiated as of 2008 by the authorities.

After having been the first insurance company set up by the State as a symbol of reconquered independence, CAAR would be the first company to be privatized.

⁽¹⁾ http://babksantina.com/caat-compagnie-algerienne-des-assurances.html#
⁽²⁾ Exchange rate as at 9/03/2011 : 1 DZD = 0.01395 USD

CAAR, the training school of the Algerian insurance market

he renowned Algerian insurance leaders have all been through CAAR. The most senior insurance company has indeed played the role of a trainer and supplier of executive staff for the entire market.

Upon its inception, the company has crafted different training programs for all various levels: beginners and medium professional insurance degrees, long-term training programs for actuaries and top executive staff in Europe, ongoing training for the benefit of staff members operating via the in-house television network, partaking in the establishment of training institutes, advanced training programs in Algeria and abroad, etc.

CAAR today

A historic company, a training school for the market, CAAR stands as a reference in Algeria. In spite of the end of specialization, it has remained the insurer of major industrial risks.

With a consolidated turnover (CAAR and CAARAMA) of 18.4 billion DZD (172.8 million USD), that is 14.1% of the total Algerian premiums collected in 2015, the group is ranking third on the market after SAA and CAAT.

CAAR group in comparison with the Algerian insurance market (2015 figures)

in thousands USD

Non life
CAAR	Non life market turnover	CAAR turnover	% in non life market business	% in the Group’s consolidated turnover
	1 128 000	156 092	13.8 %	90.32 %

in thousands USD

Life
CAARAMA	Life market turnover	CAARAMA turnover	% in life market business	% in the Group’s consolidated turnover
	99 449	16 736	16.8 %	9.68 %

in thousands USD

	2015
Group’s consolidated turnover	172 828
Life & non life market turnover	1 227 449
CAAR’s market share	14.1 %

Exchange rate as at 31/12/2015 : 1 DZD= 0.009382 USD

Chronology of events

• 1963
  On 8 June 1963, the insurance & reinsurance Algerian company was created in Algiers
• 1966
  Nationalisation of the market
• 1978
  • The Algerian State imposed the specialisation of the insurance market
  • CAAR became the insurer of industrial and marine risks
• 1985
  CAAR ceded its marine business to CAAT
• 1989
  End of the specialisation of the insurance market
• 1995
  Opening the insurance market to private investments
• 2009
  CAAR embarked on bancassurance
• 2011
  • Mandatory separation of life and non life activities of insurance companies
  • March 2011: Establishment of CAARAMA Assurances, a subsidiary specialized in life insurance

CAAR's main technical highlights: 2011-2015

in thousands USD

	2011	2012	2013	2014	2015
Gross written premiums	170 121	181 144	195 601	184 052	156 092
Written premiums net of reinsurance	101 628	106 362	125 842	110 882	84 475
Gross earned premiums	177 756	171 209	190 004	177 068	153 515
-Non life gross earned premiums	168 033	169 663	190 047	174 838	153 478
-Life gross earned premiums	9 723	1 546	-43	2 230	37
Gross incurred losses	97 949	100 990	113 022	169 413	108 644
-Non life gross incurred losses	86 466	98 670	112 656	169 273	108 529
-Life gross incurred losses	11 483	2 320	366	140	115
Life and non life management expenses	44 580	47 621	49 651	45 125	38 410
Non life gross loss ratio	51.5%	58.2%	59.3%	96.8%	70.7%
Management expenses ratio (1)	26.2%	26.3%	25.4%	24.5%	24.6%
Non life combined ratio	77.7%	84.5%	84.7%	121.3%	95.3%
Technical result	3 200	4 657	15 720	7 208	4 509
Financial income	9 205	7 973	6 070	7 426	9 832
Net result	8 780	9 159	14 846	10 603	10 328

⁽¹⁾ Expenses ratio = management expenses / gross written premiums

CAAR: evolution of premiums, losses and results: 2011-2015

in thousands USD

CAAR: evolution of technical ratios: 2011-2015

CAAR: breakdown of turnover per class of business: 2011-2015

in thousands USD

	2011	2012	2013	2014	2015	2015 shares
Fire	35 559	37 442	40 947	43 318	39 529	25.4%
Engineering	15 048	19 588	21 868	16 814	14 660	9.4%
Third party liability	5 974	6 527	6 674	7 132	6 256	4%
Miscellaneous risks/special risks	6 669	6 439	5 787	5 651	4 567	2.9%
Natural catastrophes	3 694	3 794	3 777	3 796	3 300	2.1%
Total P&C (1)	66 944	73 790	79 053	76 711	68 312	43.8%
Marine	25 107	24 763	22 109	23 464	17 792	11.4%
Motor	71 208	81 840	93 916	81 717	69 996	44.8%
Life insurance	6 862	751	523	2 160(2)	-8(3)	-
Grand total	170 121	181 144	195 601	184 052	156 092	100%

⁽¹⁾Fire, accident and miscellaneous risks
⁽²⁾ Settlement of the group insurance premium "death and disability "
⁽³⁾Returns (reimbursements)

CAAR: breakdown of 2015 turnover per class of business

⁽¹⁾Miscellaneous risks/special risks
⁽²⁾ Natural catastrophes

CAAR: non life gross earned premiums2011-2015

in thousands USD

	2011	2012	2013	2014	2015
Fire	32 626	36 194	41 116	36 672	41 063
Engineering	19 169	17 675	19 320	16 570	14 102
Third party liability	6 266	6 446	7 580	6 875	6 332
Miscellaneous risks/special risks	6 415	6 347	6 021	5 588	4 642
Natural catastrophes	3 650	3 653	3 718	3 805	3 177
Total P&C (1)	68 126	70 315	77 755	69 510	69 316
Marine	27 819	25 880	24 526	21 520	17 110
Motor	72 088	73 452	87 766	83 808	67 052
Credit	-	16	-	-	-
Grand total	168 033	169 663	190 047	174 838	153 478

⁽¹⁾Fire, accident and miscellaneous risks

CAAR: non life gross incurred losses 2011-2015

in thousands USD

	2011	2012	2013	2014	2015
Fire	23 604	16 006	18 118	25 755	41 968
Engineering	-243	2 283	4 687	6 524	6 103
Third party liability	-421	-81	849	119	2 296
Miscellaneous risks/special risks	652	-2 545	401	2 444	-285
Natural catastrophes	62	10	-10	-28	-
Total P&C (1)	23 654	15 673	24 045	34 814	50 082
Marine	1 921	7 370	7 018	70 657	3 835
Motor	59 203	75 259	81 468	63 813	54 614
Credit	1 688	368	125	-11	-2
Grand total	86 466	98 670	112 656	169 273	108 529

⁽¹⁾Fire, accident and miscellaneous risks

CAAR: non life gross loss ratio 2011-2015

	2011	2012	2013	2014	2015
Fire	72.3%	44.2%	44.1%	70.2%	102.2%
Engineering	-1.3%	12.9%	24.3%	39.4%	43.3%
Third party liability	-6.7%	-1.3%	11.2%	1.7%	36.3%
Miscellaneous risks/special risks	10.2%	-40.1%	6.7%	43.7%	-6.1%
Natural catastrophes	1.7%	0.3%	-0.3%	-0.7%	-
Total P&C (1)	34.7%	22.3%	30.9%	50.1%	72.3%
Marine	6.9%	28.5%	28.6%	328.3%	22.4%
Motor	82.1%	102.5%	92.8%	76.1%	81.4%
Total	51.5%	58.2%	59.3%	96.8%	70.7%

⁽¹⁾ Fire, accident and miscellaneous risks

Exchange rate DZD/USD as at 31/12	2011	2012	2013	2014	2015
	0.01325	0.01285	0.01287	0.01144	0.009382