Risky business is all about doing the math

Walid Sidani, the chief executive of the Abu Dhabi National Insurance Company (Adnic), has spent 22 years in insurance in the US, Egypt and the UAE, but does not seem to have lost his enthusiasm for the industry.

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He grew up in Lebanon but fled the civil war and went to the US to complete his studies. There he joined Crum & Forster, one of the first US insurance companies set up after the great fire of Chicago in 1871.

After a number of years there, he sought international experience, so he joined American International Group (AIG). "I worked there for five years and saw no international experience," he says. "Finally an opportunity came up in Egypt. They had bought the first privatised insurance company there."

After18 months he was given the choice of either moving to Dubai or relocating to Athens, which was then AIG's regional hub. That was in about 2001.

"I told them Dubai was the place to be," he says. AIG was the third tenant at the Dubai International Financial Centre (DIFC).

"It wasn't until in 2008 we realised the fragility of the financial system." AIG was caught up in the maelstrom, so when he got the chance to become chief executive of Adnic, he jumped at it.

"It's a diamond in the rough," he says. "You don't hear too much about it, but you realise it has great international links. By chance I went last December to Japan and it happened to be the 30th anniversary of the last chairman's visit. The Japanese remembered and recognised that. It was quite an honour."

Adnic is the second-largest insurance company in the UAE in terms of revenue, and in the top three in terms of profit. It is ranked in the top seven in the Gulf region, and has ambitions to be in the top five in all indicators in the next five years.

I caught up with Mr Shidani at the Adnic Yas Run last weekend, where he was the official starter.

He is married with two children, and his wife is expecting a third. "That's why she's not running today," he says.

His background is in physics and political science, which he says are useful in insurance. "Insurance is all about actuarial forecasting, you need a mathematics background," he says.

"But it's also about law, engineering, it goes across different silos. I've had opportunities to travel, even at Adnic, which has international tentacles."

It seems with the exception of AIG insurance companies came through the economic crisis unscathed. Is that correct and if so, why was that?

I'm glad you mentioned that AIG was an anomaly. It was a small unit in Europe looking at innovative products. The impact of that was enormous on a worldwide basis. Compared to banking, insurance is more regulated. Some banking sectors are well regulated, such as in Canada, but in general it came back to how well risks were assessed. Insurance has always been about risk management. Banking hasn't, and still isn't. Risk management came out of insurance. It's a bigger part of the business. And there are bigger, newer regulations for insurance, perhaps even too fast in the UAE, but they're definitely on the right track.

Adnic was set up in 1972 as a general insurer?

Yes, to be a composite insurance company to insure all types of risk from cars to shipping to construction to medical insurance. Medical insurance is one of the few lines of business that is compulsory. We have a small portfolio, because we did not need to have a large one. When I joined in 2009 we had a very healthy portfolio. For example, we insured everything on [Yas Island]. But all good things come to an end. Yas Marina is finished. If you focus on mega-projects, these can end.

So you are looking to diversify?

Yes. Mega-projects are always going to be part of our portfolio, but we had to look at other opportunities. One of these is population growth. Expatriates are used to insurance, they understand the culture of it. We also need to go into the small and medium-sized enterprises, but also the house, the car, the individual, not just the factory or the major project. This gives us a chance to manage our portfolio. Everything is cyclical.

Why are you involved in the Yas Run?

This is one of the only sporting events to commemorate the founding of the UAE. It is also an official 10km race. And it's good for our brand awareness. It is also because 25 per cent of our business is health-related.

Is it a challenge to be a health insurer in the UAE?

Of course. There is diabetes and heart problems, blood pressure and stress. It's partly to do with the weather. But we have an obligation and a commitment. We're a national insurance company, we have to set an example, that's why about 10 per cent of the company is running. And why we are encouraging our staff to give up smoking.

How many staff do you have?

We have 465. Twelve branches of the UAE.

But you're just one of 61 insurance companies in the UAE?

Yes, but we are competitive and the market leader. It's a lot. In the next few years there may be some consolidation.

rwright@thenational.ae