“Moody’s” expects high risks for GCC insurance
Wednesday, 03 01 2017, Category: Insurance and Reinsurance, Country: Gulf Cooperation Council
Insurers in most Gulf Cooperation Council (GCC) countries will likely face moderate-to-high credit risk over the next 12-18 months, says Moody's Investors Service.
"Weak oil prices and high exposure to volatile investment assets are driving credit risk for GCC insurers. These factors are partly offset by the low insurance penetration across the region and improving insurance regulation," says Mohammed Ali Londe, Assistant Vice President - Analyst at Moody's.
The rating agency considers asset quality to be a key credit weakness for many insurers in the region.
The risk is greatest for insurers in Oman, Bahrain and Saudi Arabia, reflecting those countries' oil dependence and high break-even oil prices.
Growth in GCC insurance premiums slowed to 14% in 2015 year on year (y-o-y) from 17% in 2013 y-o-y, still far exceeding growth rates in advanced economies.