GCC - Improved profits of Islamic insurers
Monday, 12 18 2017, Category: Islamic Insurance, Country: Gulf Cooperation Council
Islamic insurers in Saudi Arabia and the United Arab Emirates (UAE) have reported improved profitability due to recent regulatory changes that have driven up prices, particularly in the motor and health insurance segments, Moody's Investors Service said in a new report.
The changes have led to improved underwriting profitability for Takaful insurers in Gulf Cooperation Council (GCC) countries, many of which have posted underwriting losses in recent years, despite double-digit premium growth, the report said.
In Saudi Arabia, actuarial reserving and pricing contributed to a decline in the overall loss ratio to 77 percent in 2016 from 79 percent in 2015. It has reduced further to 76 percent for the first nine months of 2017.
In the UAE, Takaful operators' loss ratio declined to 63 percent in the first nine months of 2017 from 89 percent and 79 percent for 2016 and 2015, respectively.
“The GCC Takaful insurance sector's improved performance will help it halt capital erosion, attract investor interest, and refocus on its most lucrative markets,” Mohammed Ali Londe, assistant vice president – analyst, Moody's, said in the statement.
“Despite double-digit growth in prior years, GCC takaful insurers' underwriting profitability has been weak to negative in recent years ‑ combined ratios for the region have been close to or above the 100 percent break-even point,” he added.