A new Best’s Special Report, titled, “Pressure on MENA Reinsurance Market Persists as Regional Players Produce Mixed Earnings,” notes that the majority of markets are open with few restrictions on reinsurance operations, despite initiatives in some countries aimed at nurturing growth and the retention of business within the local market.
The report notes that operating performance remains profitable for most reinsurers in the region; however, for many this reflects robust investment income that has offset increasingly pressured underwriting earnings. The persistence of thin technical margins coupled with an increase in large loss experience from property, engineering and energy lines has resulted in diminished underwriting results for many regional reinsurers in 2015. Given that technical margins in the region have been declining in recent years, regional reinsurers are looking further afield to search for higher margin businesses that complement their existing portfolios.
“While this can be viewed as a positive step, there is undoubtedly execution risk associated with expanding into unfamiliar markets, given the higher anticipated catastrophe risks that may be assumed by writing new business, and which could result in unexpected volatility in company earnings,” added Mistry.
To access a complimentary copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=253869.
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