Tightening liquidity to deter recovery of GCC insurers’ receivables
Monday, 11 09 2020, Category: Rating, Country: Gulf Cooperation Council
Tightening liquidity in the GCC will hinder recovery of receivables for insurers who are already exposed to substantial levels of receivables, Moody’s Investors Service said in a report.
Leading P&C (property and casualty) insurers in the GCC will be facing the “risk of increased provisioning and exacerbating pressure” on their profitability if the liquidity situation tightens further, said the rating agency.
The GCC’s insurance market is expected to grow to $36.1 billion in 2024 from $29.2 billion in 2019, as regional governments push to strengthen regulations, introduce mandatory insurance lines and diversify the economy, according to Alpen Capital.
The UAE and Saudi Arabia, the two top economies of the region, continue to dominate the insurance sector accounting for 44.3 per cent and 33.6 per cent of the region’s GWP in 2018, respectively.
“The coronavirus-driven economic shock caused a sharp decline in oil prices that widened the region’s budget deficits and will weigh on public spending across the region, with negative economic consequences,” said Mohammed Ali Londe, a vice president - senior analyst at Moody’s in Dubai.