A Cautious Recovery for the Gulf Cooperation Council Nations
The Middle East and North Africa region includes a diverse mix of markets, regulatory systems and political environments.
- Best’s Review Staff
- January 2022
SKYLINE SHOT: An aerial view of Dubai, the most populous city in the United Arab Emirates.
The market segment outlook for the Gulf Cooperation Council nations—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates—remains negative after it had been changed to negative during the early days of the COVID pandemic, according to Alex Rafferty, associate director, analytics, AM Best, speaking at AM Best's MENA Insurance Market Briefing – Dubai, held in October.
A range of positive and negative factors defines the insurance market in the region, Rafferty said.
“Some of the headwinds appear to be moderating,” Rafferty said, adding later in his presentation, “We maintain a cautious view.”
Those headwinds include:
- Persisting COVID-19-driven uncertainty and risk of further oil price volatility, which maintain economic pressures across the region.
- Expectations of strains on premium growth and development opportunities.
- Pricing adequacy concerns amid intense market competition.
- Financial market fluctuations and depressed real estate valuations.
- Liquidity pressures and potential for delays in cash collection.
- Insurers are generally well capitalized and proving resilient to shock scenarios.
- Economic conditions are recovering.
- Regulatory oversight and controls are tightening.
- Some regional geopolitical tensions are easing.
- Opportunities are emerging for market consolidation and mergers and acquisitions.
“Following several years of persisting soft market conditions, pricing and terms in the Middle East and North Africa are turning in favor of the region's reinsurers,” according to the Best's Market Segment Report: MENA Reinsurance: Improving Market Conditions Signal Change for Region's Reinsurers.
“The current market hardening, partly a byproduct of global reinsurance trends, and partly in response to regional underwriting performance strains, is a clear tailwind for reinsurance providers in the region,” according to the report's authors, which included Rafferty.