Best’s Special Report: MENA (Re)Insurers Encounter Challenging Operating Environment but Region Retains Allure

LONDON--(BUSINESS WIRE)-- Against the backdrop of ongoing geopolitical tensions in the Middle East and North Africa (MENA), political, financial, and economic risks for (re)insurers operating in the region remain elevated. Nevertheless, A.M. Best believes MENA territories present attractive growth opportunities for some (re)insurers.

A new Best’s Special Report, titled, “MENA (Re)insurers Encounter Challenging Operating Environment but Region Retains Allure,” states the credit quality of (re)insurers operating in the MENA region is likely to be further tested over the next few years as a result of the increasingly uncertain operating environment. Low hydrocarbon prices in 2017 negatively impacted economies dependent on oil and gas revenues, and there was growing instability throughout the region.

However, the report adds that there is optimism for the MENA markets. Mahesh Mistry, senior director, analytics, said: “Despite the inherent challenges of operating in the region, there are opportunities for growth owing to the low penetration rates compared with other emerging economies and mature markets, in addition to the continued introduction of compulsory covers such as medical health care.”

The report examines how the (re)insurance landscape is changing, owing to merger and acquisition activity. In A.M. Best’s opinion, the market remains fragmented, with a large number of primary companies chasing premiums in small markets. Leading participants (generally the largest five in each country) normally dominate, controlling over 50% of total premiums, leaving the smaller companies to compete for the remaining premium. Over the past 10 years, the market share of the largest companies has grown gradually, and A.M. Best expects their dominant positions to strengthen further over the coming years.

Yvette Essen, director, research and communications, and report author, added: “Acquisitions have been driven by market access, e.g., licensing, and distribution, with regional companies consolidating their positions as they seek to enhance their business profiles. A.M. Best believes that market consolidation in the MENA region is a positive trend, with many regulators actively encouraging mergers between participants and in some cases, providing incentives.”

To access a complimentary copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=270082.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

Mahesh Mistry, +44 20 7397 0325

Senior Director, Analytics

[email protected]

or

Aneela Mather-Khan, +44 (0) 20 7397 0319

Financial Analyst

[email protected]

or

Yvette Essen, +44 20 7397 0322

Director, Research & Communications –

Europe, Middle East & Africa

[email protected]

or

Edem Kuenyehia, +44 20 7397 0280

Director, Market Development &

Communications

[email protected]

Source: A.M. Best