LONDON–(BUSINESS WIRE)–Insurance markets in the Middle East and North Africa (MENA) have experienced robust growth over the past decade. However, according to a new AM Best report, the growth rate has stagnated over the past 18 months, mainly due to the impact of COVID-19 and volatility in energy prices, largely attributable to the global economic slowdown due to containment measures and lower oil demand.
the Best Market Segment Report, “Assessing MENA Ratings Using Best’s Credit Rating Methodology,” notes that MENA markets continue to face significant challenges, including volatility in equity and real estate markets; changes in value added taxation in the Gulf Cooperation Council (GCC) region; changes in the regulatory landscape; geopolitical tensions; inflationary pressures, supply chain disruptions; and currency depreciation for many non-GCC economies.
The report highlights some common themes as weaknesses, the most important of which is risk governance, with companies adopting baseline or minimum requirements to manage their businesses. Some companies have only recently taken the initiative to adopt more careful and sophisticated approaches to managing their operations. This was evidenced by their significant adjustments regarding restated financial statements, asset impairments, reserve strengthening and fraud incidents.
According to the report, there are significant headwinds which create a challenging operating environment, particularly for non-GCC member (re)insurers who operate under higher levels of country risk and are therefore subject to greater volatility and uncertainty. . There have been a few instances of negative pressure on ratings resulting from delays in completing financial reports, which highlight governance issues.
To access a free copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=316672.
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