A report from Standard & Poor’s shows insurance markets in the six countries of the Gulf Cooperation Council (GCC) region are deepening.
While markets are still growing, to participants used to double-digit growth, current business development probably seems positively sluggish as the global economic slowdown takes effect in the region. Regulatory supervision brings more change, some of it extensive.
In the region’s maturing markets, larger companies are building markets at the expense of smaller competitors. Mid-size firms are falling away, leaving a split in the region between large and small insurance companies. The abundance of small players with insufficient underwriting expertise continues to cause more risk-aware companies difficulty; the resulting fierce competition is unsustainable, in our view.
On Nov. 15, 2011, Standard & Poor’s rated 34 insurers and reinsurers in the region. They assessed the credit ratings outlook for the spectrum of insurers and reinsurers in the GCC region as stable, reflecting the companies’ generally strong capital adequacy, strong asset liquidity, and strong technical earnings. Although all of the GCC insurance markets are very competitive, most primary insurers maintain favorable underwriting margins.
These reflect the strengths of the core business and the persistency of reinsurance capacity provided to the region’s companies, which generates attractive inward commission flows.
Source : S&P
