AM BestTV: Energy Risks Dominate MENA Reinsurance Sector, Says AM Best Director

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FOR IMMEDIATE RELEASE

OLDWICK - OCTOBER 03, 2019 03:25 PM (EDT)
In this AM BestTV episode, Salman Siddiqui, director of analytics, AM Best, said large European insurers are key players in the Middle East, with local reinsurers playing a follower role. Click on http://www.ambest.com/v.asp?v=globalremena919 to view the entire program.

For some reinsurers operating in the Middle East and North Africa (MENA), there have been some distinct challenges, though some companies have benefited from the opportunities. Siddiqui highlighted some of the key characteristics of the MENA reinsurance market.

“Similar to the global reinsurance market, the MENA reinsurance market is characterized by increasing competition,” said Siddiqui. “Despite the withdrawal of some capacity, the pressure on rates remains similar to the international reinsurance market. Furthermore, the MENA region is dominated by international European reinsurance companies. The big four have a major stake in the Middle East, as the market is dominated by the energy sector. As the price of oil goes up and down, so does the demand for reinsurance.”

Siddiqui also addressed the operating performance of companies in the region.

“In terms of combined ratio, the MENA market is slightly behind the global average, and therefore, has a lower level of underwriting returns. However, the North African market has seen an interesting trend. The loss ratios have been seeing an uptick over the past three years. This is driven by these companies trying to diversify their portfolio beyond their core markets. Consequently, they are attracting new business and are pricing it slightly lower to get that business on their books, which will increase their loss ratios over time.”

To access a copy of this market segment report, titled, “MENA Reinsurers: Turbulence Creates Opportunity,” visit http://www3.ambest.com/bestweek/purchase.asp?record_code=290352 .

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AM Best is a global credit rating agency and information provider with an exclusive focus on the insurance industry.