Economy, Business And Markets

Turkish Insurer Eyes Iranian Market

Turkish Insurer Eyes  Iranian Market		Turkish Insurer Eyes  Iranian Market

AvivaSA, one of Turkey's leading private pension and life insurance company has made an official bid to enter Iran's lucrative market. The Turkish insurer filed a formal request with the Central Insurance of Iran, and is awaiting approval by the regulatory body, Banker website reported late Saturday.

Foreign insurance companies are legally allowed to operate in Iran either through partnership with domestic companies or independently. But first they must get a permit from the CII (Bimeh Markazi). AvivaSA is currently represented in Iran by Homan Supporting Counsel Institution.

If AvivaSA is granted a license to operate in Iran, its long experience in providing life and pension services could benefit Iran, where these insurance services are largely untapped, experts familiar with the matter said.

Iran has seen increasing interest from foreign investors during the past year. Among these, foreign insurers have shown great interest in Iran's 80 million economy. All eyes are on the marathon nuclear talks between Iran and the P5+1 (the five permanent members of UN Security Council plus Germany) as they enter their final days ahead of a June 30 deadline.

AvivaSA provides life and pensions products to over 2 million customers and had a $96.4 million net asset value as of June 30, 2014.

Its joint venture with Sabanci Group sells life and pensions products through banks and agencies. Their main distribution channel is Akbank, which is one of Turkey's largest privately owned banks, with over 900 branches, according to the company's website.  

AvivaSA also has one of the largest direct sales forces in the market, with 600 agents. The company is headquartered in Istanbul, Turkey.

Investment Bonanza

Mohammad Ebrahim Amin, head of CII, earlier announced that in a meeting with Nasco Insurance Group's representatives in Tehran, they had expressed the desire to have an active investment role in Iran once nuclear sanctions are lifted. The French insurance group recently opened an office in Iran.

Insurance groups are not the only eager candidates for big-ticket investments in Iran should the sanctions end. According to the Wall Street Journal, If Iran transitions from a fringe market dominated by local investors to an open one with a size commensurate with its economy, the upside could be huge. Companies listed on the Tehran Exchange are worth about 28% of the country’s gross domestic product, a lower ratio than most of the largest emerging markets, the journal reported.

First Frontier, a boutique investment bank, also announced plans in April to set up an investment fund with Tehran’s Agah Group, trying to combine its ties to non-Iranian institutions with Agah’s knowledge of the local market to take advantage of the opening.

A move is also underway to help foreign investors by creating instruments to hedge against fluctuations in rial's value, according to Hamed Soltaninejad, managing director of the Central Securities Depository of Iran, a registration and custody body for the stock market.

"Many foreign investors don’t like to take on currency risk," he said.

Iran and the six powers are negotiating to reach a comprehensive agreement that would terminate all sanctions against Tehran in exchange for Iran limiting parts of its nuclear energy program.