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

LONDON--()--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.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates.
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Contacts

A.M. Best
Mahesh Mistry, +44 20 7397 0325
Senior Director, Analytics
mahesh.mistry@ambest.com
or
Aneela Mather-Khan, +44 (0) 20 7397 0319
Financial Analyst
aneela.mather-khan@ambest.com
or
Yvette Essen, +44 20 7397 0322
Director, Research & Communications –
Europe, Middle East & Africa
yvette.essen@ambest.com
or
Edem Kuenyehia, +44 20 7397 0280
Director, Market Development &
Communications
edem.kuenyehia@ambest.com

Contacts

A.M. Best
Mahesh Mistry, +44 20 7397 0325
Senior Director, Analytics
mahesh.mistry@ambest.com
or
Aneela Mather-Khan, +44 (0) 20 7397 0319
Financial Analyst
aneela.mather-khan@ambest.com
or
Yvette Essen, +44 20 7397 0322
Director, Research & Communications –
Europe, Middle East & Africa
yvette.essen@ambest.com
or
Edem Kuenyehia, +44 20 7397 0280
Director, Market Development &
Communications
edem.kuenyehia@ambest.com