Dubai - Mubasher: Insurance companies in the majority of the Arabian Gulf countries face moderate credit risk over the next 12 to 18 months, according to a report by Moody's Investors Service.

Risks in the countries of the Gulf Cooperation Council (GCC) are reflecting muted economic growth due to low range-bound oil prices and their relatively high exposure to volatile investment assets.

“Asset quality continues to be a key credit weakness for many insurers in the region,” said Mohammed Londe, an assistant vice president at the ratings firm.

“Low levels of GCC sovereign and corporate bond issuance have historically limited insurers' fixed income investment options, increasing their exposure to volatile equities and illiquid real estate investments, making their investment returns more volatile,” he added.

These factors are partly offset by anticipated strong premium growth, helped by the spread of compulsory medical cover and rising motor and property insurance prices in the region, the reported noted.

Moody's expects infrastructure spending, including events such as EXPO 2020 and the FIFA 2022 World Cup, to support premium growth over the next five years.