Insurers in most Gulf Cooperation Council (GCC) countries will likely face moderate-to-high credit risk over the next 12-18 months, said a report. The report issued by Moody’s Investors Service said low oil prices are a headwind for the GCC insurance market in the short to medium term, as they slow economic growth and weigh on government spending. Growth in GCC insurance premiums slowed to 14 percent in 2015 year-on-year from 17 percent in 2013 year-on-year, still far exceeding growth rates in advanced economies, it added.
“Weak oil prices and high exposure to volatile investment assets are driving credit risk for GCC insurers. These factors are partly offset by the low insurance penetration across the region and improving insurance regulation,” said Mohammed Ali Londe, an assistant vice president and analyst at Moody’s. According to the report, the risk is greatest for insurers in Oman, Bahrain and Saudi Arabia, reflecting their oil dependence and high break-even oil prices.—Agencies