The insurance market in Israel is composed of almost exclusively Israeli companies. Two of the world's largest international insurance groups previously operated in Israel: AIG and Generali, which controlled Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL).
Generali exited Israel in late 2012, but there are still two international companies operating in Israel in their own names. One is Coface, one of the world's largest credit insurance companies, which began doing business in Israel a few years ago, and already has a market share of over 10%. Coface Israel Country Manager Carmine Mandola, who has managed the company in Israel since it began its activity here, told "Globes" that he was still far from achieving what he wanted with the company.
Coface started doing business in Israel in early 2015, thereby becoming the third player in the Israeli insurance market for short-term credit after Israel Credit Insurance Company (ICIC) and Clal Credit Insurance. Coface started activity in Colombia and Morocco at the same time. "Before Israel, I worked as Coface's financial manager for Africa, the Middle East, and the Mediterranean basin from the company headquarters in Milan," Mandola says. "Coface is an international company divided into several regions.
"One of the projects for which I was responsible was making inquiries about entering the credit insurance market in other countries. One of those countries was Morocco, where I founded the activity in 2013. I lived by myself in Casablanca for six months in order to get things started there.
"Then I went to Milan, and several months later started looking into establishing activity in Israel. Why Israel? Israel has impressive growth in GDP, a diversified economy, and large-scale exports. So for six months, I came for one week every month, starting in the second half of 2013, in order to study the market, the customers, and so forth.
"Then I drew up a business plan, which the group approved in April 2014. In July 2014, I came here with my family, and have been here ever since. My relocation took place during the operation in Gaza, and the first warning siren in Tel Aviv took place when I was at one of the hotels in the city, when I suddenly saw many people running in one direction from the beach. That seemed strange to me. I asked the waiter if it was what I thought it was, and he told me to take cover. I was here without my family at the time. It wasn't a shock for me, because I felt safe the whole time."
Credit insurance for businesses is designed to protect local businesses from bankruptcy or loss resulting from non-payment by customers in Israel or overseas for all kinds of reasons. Coface is the world's second largest credit insurance group in terms of premiums, "and has the largest presence in the world," Mandola adds.
The largest credit insurance company in the world is Euler Hermes, and the third largest is Atradius. Both of these companies have a presence in Israel; Euler Hermes has a partnership with Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) in ICIC, which was founded in 1957, and Atradius holds a one fifth stake in Clal Credit Insurance, founded in 1981, which is controlled by Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS). As far as is known, Atradius operates directly in several contracts in Israel, instead of through Clal Credit Insurance, and global company AIG works on a very small scale in this segment with Israeli companies.
The Israeli market is divided between the three companies. Premiums in this large market took a nosedive in 2014 from almost NIS 240 million to NIS 219 million, attributed to ICIC's losing Israel Chemicals (TASE: ICL: NYSE: ICL) as a client to Atradius. Since Coface entered the market, the market has returned to its pre-2014 dimensions, and now amounts to over NIS 240 million. "We contributed a lot to enlarging this market in Israel," Mandola asserts, emphasizing, "There are new clients that did not previously have credit insurance."
"Globes": Your market share is already 10.6%.
Mandola: "Our operating results are positive, but in the bottom line, we're still on the way to there, because we haven't yet reached the necessarily size. We're outperforming the previous plans; I'm a year ahead of the business plan I wrote. Our market share is higher than 10.6%; it's around 12%. There's no doubt that the Israeli market welcomed a third credit insurance player with open arms. Coface's entry met demand in the market. Our entry into the market enlarged it."
What is your target?
"We want to grow as much as we can. It's an open market, and there are many companies without credit insurance. There are players in the market already, but there's also potential. This was a market of two companies who wanted to keep the profits to themselves, and there were many companies for which there was no solution. We're aiming at those companies. We're interested in small and medium-sized companies with turnovers of NIS 20-100 million. Our current target market doesn't go higher than that right now. It's not that we're not interested in it, but it's not our focus at the moment."
Are you offering rock bottom prices in order to grow?
"We don't offer low prices - not at all. Our aim is to provide good service and good and extensive coverage."
In which sectors do you specialize?
"We work with all sectors. There are no specific sectors we don't work with."
What do you have to say about ICIC and Clal Credit Insurance?
"I don't talk about competitors."
What do you think about the insurance market in Israel?
"It's a widely dispersed and diverse market, with five or six major companies and seven or eight more. The way I see it, there's enough competition in the Israeli insurance market. I was surprised at first at the absence of international players in insurance and banking."
Will Coface stay in Israel in the long term?
"Forever. This is a commitment by the group, which came here to stay."
What do you think about the economic situation in Israel?
"The Israeli economy is very interesting. It's constantly growing at a fast pace, and all the sectors are growing. We also see a rise in turnovers among commercial companies, and there is activity and new companies, products and services. It's truly a very interesting economy."
How does Coface see Israel globally?
"From a geopolitical perspective, Israel always looks the same. The geopolitical situation is always interesting, but the conflict between Israel and Palestine is likely to continue for years, so there's a threat, but it's possible to go on living with it, as has been the case up until now. There is a negative point, but it's bearable."
What are the riskiest sectors in Israel?
"The riskiest sectors in Israel are construction and contracting, retail businesses, and electronics products and mobile telephone accessories. I believe we'll see more bankruptcies, especially in fashion."
How long have you been living in Israel?
"Almost four years. I love Israel, and I think about what I have to do to stay here. I'll do anything to stay here except convert to Judaism. As far as I'm concerned, I'll stay Coface Israel Country Manager as long as I'm needed; I like it. I'm involved in a number of projects at the group level, but my job is to manage the business in Israel."
Did you apply for citizenship here?
"No, but I'm thinking about it. I'll check out all the options.
Published by Globes [online], Israel business news - www.globes-online.com - on April 25, 2018
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