.M. Best for credit rating: UAE is a key insurance market in the MENA

: 9/7/2014

A.M. Best for credit rating: UAE is a key insurance market in the MENA

 

 

 

 

Sunday, September 7, 2014

A.M. Best for credit rating: UAE is a key insurance market in the MENA

 

A.M. Best for credit rating reported that the total value of the insurance premiums active in the Middle East and North Africa (MENA) region exceeded $35 billion (AED128.4 billion) in 2014, noting that the UAE is a key insurance market in the region.

 

A.M. Best's indicators demonstrate that the UAE’s share amounts to 23% of total premiums in the MENA, after the insurance companies operating in the local market recorded premiums that amount to AED29.5 billion during 2013, rising by 12.2% when compared to 2012.

 

According to A.M. Best:  “Insurance premiums in the MENA markets exceeded $35 billion in 2013 and the UAE tops these markets, followed by the Kingdom of Saudi Arabia and Turkey”.

 

In details, A.M. Best reported that "the MENA insurance markets have seen progressive growth during recent years, making it an attractive market for the traditional reinsurance and Takaful companies”.

 

It reported that “the international reinsurance companies have a significant role in the insurance markets in the region, by providing technical abilities and expertise for local partners, especially for high-value risks". A.M. Best noted that the "dependency of direct reinsurance companies on reinsurance support is still high in the MENA markets, notwithstanding the gradual increase in companies maintaining premiums”.

 

A.M. Best expects that "the foreign insurance companies will continue to depend on these markets in the foreseeable future due to their importance", noting that "in the Middle East markets, the majority of high -value risks, such as energy and infrastructure, are left for the international insurance companies, while the direct insurance companies maintain a small percentage of premiums".

 

It also reported that: "the key insurance companies embarked upon maintaining a low percentage of premiums and were highly dependent on leaving the risks for the international reinsurance market, especially for commercial risks". A.M. Best indicated that "this comes in line with efforts made by insurance companies to face the challenges of upgrading technical expertise; although the insurance companies have maintained growing levels of business in  recent years, dependency on reinsurance is still high".

A.M. Best added that "the strategies adopted by reinsurers regarding business in the MENA markets are very different". They noted that "the legislative environment in the MENA markets, including that which is provided by the Dubai International Financial Center, has contributed to opening the market and encouraging international partners to start up businesses in the region".

A.M. Best reported that: "the Dubai International Financial Center continues to attract attention to the region from other markets, such as Asia and Africa, and this experience has been reproduced in other countries in the region". They noted "the role and importance of various insurance sectors, especially health care".

Reinsurance

A.M. Best reported that it conducted an analysis in 2002 that covered 152 insurance companies in the MENA. It indicated that 60% of the total written premiums are reinsured by reinsurance companies, while this rate was only 40% in 2013.

 

A.M. Best reported that "historically, the MENA insurance companies benefited from the reinsurance rates which were the lowest in the emerging markets. As reinsurance prices have been facing pressures in recent years, it is likely that prices will start rising shortly".

Quoted from Emarat Alyoum- September 4, 2014

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