Insurance markets across the six countries of the Gulf Cooperation Council (GCC) are starting to deepen and their credit outlook is becoming strong according to credit rating agency Standard & Poor's.
"We assess the credit ratings outlook for the spectrum of insurers and reinsures in the GCC region as stable, reflecting the companies' generally strong capital adequacy, strong asset liquidity, and strong technical earnings," said Kevin Willis, Director Financial Institutions Rating Services
Although all of the GCC insurance markets are very competitive, the majority of primary insurers maintain favourable underwriting margins. These reflect the strengths of the core business and the persistency of reinsurance.
Analysts said earnings conditions are tougher for insurers that mainly write retail lines of business, predominately medical and motor, than for insurers that focus on the higher-value commercial lines. However, retail lines develop over a shorter period, enabling insurers to correct prices more quickly.
The competition in the region is fierce with large number of players in the markets. "In our view, the least professional insurers seem to be chasing cash flows, rather than underwriting surpluses. This is not a sustainable medium-term strategy," said David Anthony, analyst with S&P.