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Shaker Riad & Sons Insurance Brokers is one of the oldest most reputable insurance brokerage firms in Egypt. SRS has offered professional insurance services to local and multinational clients in Egypt since 1952 and has a unique specialty in engineering-related insurance. Given its many years of experience and engineering background, SRS is well known for its accurate presentation of construction projects' underwriting information allowing SRS to get the lowest rates possible for its clients and provide the greatest professional assistance in claims settlement.
Although a full-service insurance broker, Shaker Riad & Sons is well known for its unique engineering capabilities. Adel Shaker, SRS' Managing Director, has a post graduate civil engineering degree with a specialty in soil mechanics. From 1982 through 1987, Adel worked as a Senior QC Engineer in two of Egypt's biggest projects; the Cairo underground metro project and the Shubra el Kheima power plant. Following these two projects, Adel worked as a QC Engineer for the interconnection system of Manama Bahrain's main power grid.
Global Market Standing, Reputation and Market Share
Adel Shaker is a well-known and a highly respected figure in the MENA region. Given Adel's standing in the MENA region he was named by the Gulf Insurance Review (www.girmagazine.com) as one of the top 50 insurance leaders in the region (see attached).
Adel Shaker is currently President of the Egyptian Brokers Association (www.eiba.org.eg), one of the Egyptian Insurance Institute's instructor team and a member of the Arab Brokers League which is part of GAIF (General Arab Insurance Federation). Adel is also Vice President of the FMBA Federation of Mediterranean Assurance Brokers (www.fmba.info) and is thus known to most of the European insurance brokers' associations.
Additional Skills, Experience, Qualifications and/or Other Relevant Information
Shaker Riad & Sons Insurance Brokers is authorized and regulated by EFSA (the Egyptian Financial Supervisory Authority) in respect of general insurance business. SRS is registered in Egypt No. 46 since 1979 and its Registered Office is 21 Soliman Abaza, Dokki, 12311, Giza, Egypt.
Some highlights of Shaker Riad & Sons:
One of the largest independent risk assessment and insurance broking organizations in Egypt
Founded in 1952, oldest insurance brokerage office in Egypt
One of power 50 brokers in the MENA region
One of the top engineering brokers in Egypt
Big broker expertise
Niche broker attitude
Service driven philosophy
Flexible, proactive support
Rapid responsive service
Dedicated to a well-researched product
Until a change in the local insurance laws in 1998, Adel Shaker was also a certified loss adjuster for engineering insurance. Adel's previous experience as a certified loss adjuster, combined with his engineering background, provide unique qualifications benefiting clients in claims settlement.
Since 2007 Adel Shaker has been the insurance broker and adviser for DP World's Sokhna Port, arranging all of its insurance and risk management programs for both the Port, as well as all its development projects.
For many, claims handling capabilities are not given sufficient consideration and lack proper planning, resources and/or investment. SRS regards claim handling as a fundamental and crucial area of service for our clients.
SRS is unique in its approach where Adel Shaker has the engineering and loss adjuster background allowing the firm to provide unparalleled claims handling assistance. Adel will be integrally involved in your claims advocacy and there is no better person suited to deal with underwriters on a difficult claim. As a result, SRS' clients' claims are handled quicker and with better results.
Local Resources Available to SOTCO
Shaker Riad & Sons is unique in that it is a full service local Egyptian insurance broker. As such, SOTCO will have 24/7 access to the Company's entire 15 person staff, including its 5 person technical department headed by Adel Shaker, for any calls requesting their presence on site for technical and/or insurance administration support.
Structure of the Team
The proposed team and organizational structure is set out below. Overall responsibility for the SOTCO account would lay with Adel Shaker, however we have designated an additional Account Executive, Gamal Wahab, who will work in close-co-ordination with Adel Shaker, to ensure as far as possible that at least one Account Executive is available to SOTCO whenever required.
Adel Shaker Divisional Director & Head of Construction - Adel has over 22 years of experience in the insurance industry and began his professional career in 1979 as a civil engineer. In this role he worked as a quality control engineer for several multinational contractors on a number of mega projects (Cairo Underground, Shoubra el Kheima power plant, Kingdom of Bahrain interconnection system). In 1988 Adel joined Shaker Riad & Sons as a broker specializing in the design, placement, management and servicing of both owner and contractor controlled insurance programs with a particular concentration in large industrial projects.
Adel has joint management responsibility with Gamal Wahab for the SRS Construction Division.
Gamal A. Wahab has been the Technical Office Assistant Manager since 2009 for SRS. He graduated with a BSc in Commerce. During his career he worked as an accountant for a major construction company (Arab Contractors) for 3 years. He is the Account Executive for SRS and has worked with Adel Shaker on a number of big projects. Gamal Wahab has joint management responsibility with Adel Shaker for the SRS Construction Division.
Mohamed El Sayed, has been the Claims Assistant and Client Support Manager since 2007. Mohamed joined SRS in 2006 and is head of Technical Administration. He started off in SRS as a trainee and improved his knowledge in technical insurance through different training seminars and practice. Since his time at SRS, Mohamed has worked on all major projects handled by the company.
Ahmed Mansour joined SRS in 2008 as Technical Administrator responsible for client's project's IT needs. He has worked with SRS on all its major projects handling the insurance claims and the IT side of the claim preparation.
Sayed A. Aal joined SRS in 1995 as a Claims Manager. Sayed handles all SRS's clients' claims preparation and follow up with the team he's heading. Sayed has worked on a number of major projects handled by SRS.
Ahmed Gad joined SRS as a Claim Assistant Manager in 2006 and now is the Claims Executive and handles all key accounts of SRS.
Given the timing of the RFP and the expectation that insurance is to be in place by mid-February 2011, it is our view that the time line is extremely tight. In our experience, while certainly achievable, such a time frame rarely achieves optimal results. That being said, we believe the following timeline would achieve your stated goals:
Review and advise on the project documents
2 February 2011
Preparation of Underwriting Submissions
6 February 2011
Presentation to Proposed Markets
7 February 2011
SOTCO to Select Preferred Lead Terms
8 February 2011
Final Market Placements
10 February 2011
Submission of Duly Signed and Stamped Reinsurance Slips
14 February 2011
Issue of Cover Notes
15 February 2011
Final Policy Wording
16 February 2011
Claim Procedure Manuals
17 February 2011
It is evident from the above that there is a lot to be done within a short period of time. Alternatively, and depending on your project requirements, you might want to consider having us put in place three or six month temporary coverage. This temporary coverage would then give us ample time to develop a more extensive underwriting package and undertake a more thorough marketing process.
Market Conditions Update
Prospective Lead Insurer(s) / Markets and Available Capacity
Despite recent political events, this project will be very attractive for the US and European construction insurance markets. In order to negotiate the optimum terms and create a competitive environment we would leverage the insurance markets' appetite for the project.
The time line in the previous section provides only a limited amount of time for this type of project and so we will be forced to limit who we approach to the two or three most promising leads. The selection process for these potential lead insurers will be based upon the following criteria:
Retention / capacity
Experience in large projects
Management experience with the relevant class of insurance
A track record of fast and fair claims settlements
We believe that, given our limited timeframe, the following potential lead insurers would provide the most aggressive terms:
Potential Lead Insurers
Prevailing Current Rates for Programs Similar to SOTCO Potential Project
Rates for programs similar to SOTCO's vary depending on a number of different factors such as project value, nature and location of the project and can range from under 2.0% to over 3.5%. Typically large, energy-related, projects command the lowest rates in this market; however project value plays a large role in those projects' pricing.
Our rate estimates for SOTCO's project are detailed in Section 8.
Underwriting Philosophy for Such Programs
Underwriters consider projects such as SOTCO's as a well risk managed business with a relatively low frequency of incidents. As such, premiums in this sector are generally very competitive.
That being said, underwriters typically undertake a three step process in rate determination:
Develop a "base" rate based on project specific factors such as: construction period, exposure to natural perils, project country's legal framework, project size, type and complexity of project construction.
Adjust "base" rate for a number of subjective factors such as sponsor and/or contractor reputation / experience.
Further adjust to reflect current market conditions.
Clearly it is important to have a broker such as SRS involved in all the various stages in order to exert proper influence and guidance towards the underwriter to ensure the project receives the most competitive terms and conditions.
Relevant International and Domestic Experience and Client References
Members of SRS have been handling projects similar to SOTCO for more than 20 years. The following is a selection of Shaker Riad & Sons' experience and client references:
Egypt &Middle East
All company retail stores in Egypt
Mohamed El Sers
Egypt &Middle East
All cattle shipments to Sokhna farm + slaughter house
Sokhna Live Stock Company
Sokhna Port terminal
Imtiaz Seraj el din
DP World Sokhna Port
Ground equipment and company activity at Egyptian airports
Hundreds of millions of USD in the last 33 years
Alcatel Italia Project s in Egypt since 1977
Hundreds of millions of USD
London Clubs' gambling casinos assets and liabilities in Egypt since 1988
Hundreds of millions of USD
All assets and liabilities of Austria's Casinos in Cairo &Sharm since 1989
Cairo festival project personnel PA and medical and vehicles
Mivan Limited (Irish contractor )
All company assets in Egypt
German tower in Egypt asset and liability
Mahmoud M Ahmed
German Chamber of Industry &Commerce
Egyptian Military Factories
Outline of the Scope of Services Rendered under the Above Programs
Access to Domestic and International Insurance Markets
Survey & Analysis of Loss Exposures
Technical and Administrative Expertise
Marketing Strategy / Services
This project would be considered target business for construction insurers and therefore will be very attractive for the US and Europe construction markets. We will use the competition between the potential insurers in order to ensure a placement is achieved at the lowest pricing levels. Despite recent events in Egypt, this will still be attractive to the insurance markets and we will stress SOTCO's strategic importance to Egypt as well as its location far from any disturbances.
In terms of the Middle East and Africa, the insurance market is led by branches of major multinational insurers, is a new focus for economies in this region and underwriting activity is projected to continue to expand. This continued growth has resulted in international insurance companies expressing a great deal of interest in the region leading to greater competition. However, while the industry has become increasingly competitive, it is still not well established and we have some concerns over the market's longer-term appetite for construction business. As such, our market strategy would primarily focus on the international insurance and reinsurance markets based in the region with a better understanding of the local conditions.
Our normal strategy would be to harness the insurance market's desire for these projects to create a competitive environment in which we can negotiate the optimum terms on behalf of SOTCO. Securing a strong, recognized leader will be essential. We would look to utilize relationships that exist between the markets and both Shaker Riad & Sons and SOTCO, so as to ensure the best possible deals are achieved with the most suitable terms and conditions. Another essential strategy will be to provide maximum flexibility to ensure that in case of any changes during the life of the project, SOTCO would be able to amend and make the necessary changes without disruption. Finally, having a reputation for specializing in engineering insurance, gives SRS a competitive advantage over many brokers due to the accuracy and presentation of information provided by SRS allowing underwriters to properly evaluate and rate the project.
As noted under Section 4. (Time Lines), the time constraints imposed by the project weigh against a thorough marketing exercise with the possibility of refinement for optimum results. We are confident, however, that a competitive program can still be achieved.
Our principal aim is to give SOTCO a picture of what is available in terms of coverage, pricing and insurer profile. We would look to canvass lead insurers from those identified in Section 5 (Market Conditions).
Our principal broking tool would be the creation of a comprehensive underwriting submission developed from information provided by SOTCO. The submission would be designed to present insurers with information material to the risk in a comprehensive, yet accessible manner to facilitate the most aggressive underwriting.
Once acceptable offers are received from the selected insurers, we would provide SOTCO with a summary comparison of the key terms and conditions of each offer. SOTCO and Shaker Riad & Sons would collectively evaluate the offers for further refinement. After further negotiations, SOTCO and Shaker Riad & Sons would determine the preferred lead insurer and seek incremental capacity as necessary.
As SOTCO's project will be financed as a project financing, consideration also has to be given to the concerns of lenders. As far as possible, it would be our aim to demonstrate to lenders that SOTCO's interests are closely aligned with theirs. Given the lenders are local, we know and have worked with them in the past which will provide us with a significant advantage while placing SOTCO's insurance.
Desktop Estimate of a CAR Insurance Program for SOTCO
Our estimates are based on the following assumptions:
Property damage limit of $225 million
Third party liability limit of $20 million
CAR Insurance period: 24 months plus 12 months Extended Maintenance
Delay in start-up limit of $168 million / 24 months
Munich Re standard form plus the following conditions / clauses / exclusions:
MRE 001: Strike, Riot, Civil Commotion - limit USD 5,000,000 each and every loss
MRE 002: Cross Liability Clause
MRE 004: Extended Maintenance - 12 months
MRE 008: Warranty concerning structures in Earthquake Zones
MRE 006: Expediting Expenses (including Air Freight as per MRE 007) limited to 10% of loss amount with a maximum US$ 2,000,000 in aggregate
MRE 013: Property in Off-Site Storage - limit: USD 1,000,000 any one location
MRE 102: Underground cables, pipes & other facilities
MRE 103: Crops, Forests Cultures
MRE 106: Sections - maximum length of section 500 meters
MRE 107: Camps and Stores - Limit: USD 500,000 any one storage unit
MRE 108: Construction plant, equipment & machinery
MRE 110: Safety Measures with respect to Precipitation, Flood & Inundation
MRE 112: Fire Fighting Facilities and fire safety on construction sites
MRE 113: Inland Transit to and from the site including loading & unloading, risks - limit: USD 500,000 any one conveyance/shipment
LEG 2/96 Design Defect Clause
MRE 121 Piling and Foundation Clause
EPI 46 Swiss Dewatering Clause
Removal of Debris - limit 10% of loss amount but maximum US$ 5,000,000 each and every loss
Professional Fees - limit 5% of loss amount with a maximum of US$ 250,000 any one occurrence
72 hours Clause
Escalation clause - limit 100%
Loss minimization Clause - limit US$ 500,000 maximum each & every loss
Political Risk Exclusion
Terrorism Exclusion - NMA 2919
Radioactive Contamination Exclusion Clause
Pollution & Contamination Exclusion - NMA 1685
Nominated Loss Adjuster
Excluding gradual settlement and subsidence
Nuclear Energy Risk Exclusion Clause - NMA 1975
Excluding Cyber Risks - NMA 2914
Excluding Prototype Technologies
Third Party Liability - Local Jurisdiction Clause
Excluding Tunneling, Canal Works and Wet Works
Deductibles: Material Damage
USD 50,000 each and every loss except
USD 100,000 each and every loss in respect of testing, commissioning and maintenance
Delay in Start Up
30 days in the aggregate
Third Party Liability
USD 50,000 each and every occurrence
Net Premium: Material Damage / Third Party Liability (primary TPL)
USD 596,250 at 0.265% on USD 225,000,000
Delay in Start Up
USD 924,000 at 0.55% on USD 168,000,000
Third Party Liability (excess TPL for USD 15M x USD 5M)
The above terms are an indication only and are not binding on any party. All premiums are inclusive of taxes, charges and duties and fees / commissions payable to local insurer(s) / broker(s).
Training Programs to be Conducted
We believe it is essential for project management to have an understanding of its insurance programs and would intend to conduct educational sessions either on-site or at a suitable location in Cairo. The main thrust of the training program would be to explain the extent and operation of the coverage and provide a detailed description of the claims procedures and actions to be taken in the event of an incident.
Confirmation of Confidentiality
Shaker Riad & Sons hereby confirms that the RFP and all other communication by/with SOTCO shall be considered strictly confidential and shall not be disclosed to any third parties for evaluation or for any other purpose without the express consent of SOTCO.
Other Value Added Services
Being a local broker Shaker Riad & Sons has the advantage of being able to immediately mobilize to the site within only a few hours after any notification of an incident and can also mobilize a local loss adjuster immediately as well.
Shaker Riad & Sons can use its local contacts to provide any other insurance related to the project for the personnel or any items not insured by CAR.
We propose a flat fee of USD 50,000 which will include our full placing and advisory services, as well as all claims negotiations. Our fee is payable within 30 days of issuing the Claims Manual.
We confirm that we will maintain complete transparency with respect to our engagement as Broker of Record and will be happy to disclose any commissions applicable to the SOTCO business placed by us.