S&P: Gulf insurers' capital buffers are strong
Thursday, 07 30 2020, Category: Rating, Country: Gulf Cooperation Council
The Gulf Co-operation Council (GCC) insurers' capital buffers are strong enough in the first wave of the Covid-19 to avoid negative rating action and the pandemic has offered opportunities for them to undertake product development, according to Standard & Poor's (S & P), a global credit rating agency.
The Covid-19 related claims would be "limited" since the Gulf governments are absorbing the costs, said Sachin Sahni, associate director (Insurance Rating); S & P told a webinar on GCC Insurance Market.
"Most GCC insurers are very well capitalised, supporting relatively high ratings," he said.
In a power point presentation, S & P analysts said they anticipate many insurers to report solid underwriting results in the half year of 2020, due to a sharp reduction in motor and medical claims offsetting some weaker investment returns.
However, asset volatility, an increase in claims to more normal levels and constrained economic conditions, will likely have a "negative" effect on growth and earnings prospects in the second half of this year.
Highlighting that no Covid-19 and oil price-related rating changes on GCC insurers so far; Sahni said with medical being one of the main lines of business written in GCC, the decision of governments to absorb the cost of Covid-19 claims has proven beneficial for insurers.