Best’s Market Segment Report: AM Best Maintains Gulf Cooperation Council Outlook at Stable

AM Best 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 2020 World Expo in the United Arab Emirates (UAE). In addition, extensive reinsurance support, advances in risk management and improved regulatory sophistication across the region, are factored into the outlook.

A new Best’s Market Segment Report, titled, “Market Segment Outlook: Gulf Cooperation Council,” notes 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.

The outlook notes 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. That said, AM Best believes 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.

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