By Sam Bridge
Credit rating agency AM Best says it continues to hold a stable market segment outlook on the insurance markets of the Gulf region
Global credit rating agency AM Best has said it continues to hold a stable market segment outlook on the insurance markets of the Gulf Cooperation Council (GCC).
Key factors supporting the outlook include potential premium growth following the rollout of mandatory health insurance in Oman and Bahrain, as well as short-term growth opportunities arising from the Expo 2020 Dubai, the agency said in a statement.
It added that extensive reinsurance support, advances in risk management and improved regulatory sophistication across the region, are also factored into the outlook.
The agency noted that these factors are partially offset by a heightened risk environment due to elevated geopolitical risks. This increases the potential for volatility in hydrocarbon prices, which may in turn affect public spending in the region, AM Best said.
The outlook also noted that the balance sheets of GCC insurers generally remain well-capitalised and capable of enduring catastrophe stress scenarios, although insurers are vulnerable to shocks in investment markets, which may become more severe if economic and political instability increases.
Balance sheet strength could come under pressure for some insurers if earnings decline and shareholder dividend expectations do not adjust, said AM Best which added that those insurers that are innovative, have capital buffers, are able to rationalise their dividend policies, and have preferential access to business are in a better position to withstand the pressures of the current operating environment.
AM Best is a global credit rating agency with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.