Mubasher: S&P Global predicted its ratings on the GCC insurance market to remain stable in 2021, attributed to strong capital buffers, despite the coronavirus (COVID-19) economic repercussions and uncertainty.
A relatively large number of the GCC insurance companies, some of which are small or incur losses, are forecast to further increase their capital, namely in Kuwait and Saudi Arabia, according to a recent report by the credit rating agency.
However, the GCC insurers could face key risks relating to the potential volatility of earnings and capital.
These risks would weaken the insurers' credit conditions in 2021, especially if central banks gradually lift forbearance measures later this year.
The UAE's insurance market remains the largest and one of the most profitable in the GCC, but the gross written premium (GWP) has been relatively flat amid weaker economic conditions.
In Saudi Arabia, a modest decline in profitability is expected to be witnessed in 2021, due to uncertain economic conditions and more normalized claim levels.
The report further remarked that the real GDP of the GCC countries would rebound to around 2% in 2021 on average, after recording a sharp contraction in 2020.
However, key sectors, namely real estate, hospitality, and retail, will remain under pressure this year.