This year’s Finex began in Tehran from April 16 with the goal of bolstering ties between Iran’s capital, banking and insurance markets

The Central Insurance of Iran plans to issue insurance-tied bonds and link life insurance to investment funds in the current fiscal year (started March 21)

Reported by HPMM Group according to FINANCIAL TRIBUNE ;      Finex 2018, the biggest financial sector exhibition in the Middle East, opened on Monday at Tehran’s International Fairground to host a wide array of businesses, officials and potential investors, and help strike closer cooperation to harness the strengths of Iran’s three main financial markets.

Some 390 companies have participated in the 11th International Exhibition of Exchange, Bank and Insurance, known as Finex 2018, that will also featur several workshops orchestrated by the London-based Ernst & Young and the Cyprus-based credit analysis agency Capital Intelligence.

A slew of high-level officials, including but not limited to the heads of the financial markets, attended the four-day event.

Capital Market

Shapour Mohammadi, the head of the Securities and Exchange Organization—the capital market’s regulator, opened the event with a keynote speech in which he enumerated the achievements of the market during the previous fiscal year (ended March 20) and welcomed the opportunity provided by Finex to support positive financial efforts and promote the Iranian economy.

“The capital market offered a 25% yield last year,” he said, adding that the market’s gains amounted to 2.47 quadrillion rials ($65.23 billion) last year, a notable hike from the 1.95 quadrillion rials ($46.4 billion) of the year before.

The official also pointed to the fact that dozens of frozen symbols have been reopened in Iran’s stock markets, and promised that the remaining symbols–about 15–will be reopened in the foreseeable future.

Startups, Fintechs

Iran’s Vice President for Science and Technology Sorena Sattari was next and renewed his support for the country’s many fledgling startups and fintechs while calling on all financial markets’ players and officials to spearhead a change of mindset by backing innovative businesses and eliminating any remaining resistance toward them.

Such a resistance would be pointless and counterintuitive, as it will only counter healthy competition while failing to stop change, because Iran is home to some 33 million youth and 5 million students eager to become future entrepreneurs.

“Some of these new companies are not older than two years, but are worth $1 billion in Iran’s capital market. We must learn to stand in the rank of supporters,” he said.

“Startups, and not universities, have managed to attract the highest capitals and young elites that had exited the country.”

The official called for venture capital efforts to account for 40% of startup finance instead of seeking bank facilities.

Sattari asked banks and insurances to establish their own startup accelerators and support genuine ideas, as opposed to solely thinking of injecting funds.

Rising Profile of Insurance

The head of insurance industry’s main regulator was also at Finex 2018, making his presentation with figures from the previous year.

“Insurance premiums grew by 21% last year compared with the year before. As the rise has been higher than the nominal GDP, the industry’s penetration ratio has risen to 2.3%,” Abdolnasser Hemmati, the head of the Central Insurance of Iran, told the gathering.

According to the official, life insurance policies, which are a main focus for the regulator, registered a 30% growth last year; this was less than the 40% of the year before, but still noteworthy.

He referred to fluctuations in foreign exchange rates and bank deposit interest rates (that were first brought down to 15% in September but then offered at 20% for two weeks to counter currency swings) as reasons behind the less-than-anticipated life insurance growth because they made “other markets more attractive” for the time being.

But more importantly, he referred to some of CII’s plans for the current year, namely issuing insurance-tied bonds that he said “will transfer the risk of insurance commitments to the capital market” and linking life insurance to investment funds that will boost its attractiveness, while offering new products to the market.

“Last year marked the first time that the insurance industry had a turnover of over 500 trillion rials ($11.9 billion),” he said, announcing that the industry’s Herfindahl-Hirschman Index that monitors monopoly declined by 360 points to reach 1,400, which indicates a “semi-competitive” industry.

Hemmati said in view of the ongoing privatization efforts, it is hoped that the index will decline to below 1,000 and make it a fully competitive industry in the coming years.

Monday also saw the inauguration of FinStars, an event within Finex, which is aimed at developing fintechs and increasing cooperation.