S&P Warns Of GCC Insurance Slowdown

In its first report card on the insurance sector in the region, the ratings agency said heavy state and private sector investment in the region’s economy and infrastructure has caused insurable risk volumes to increase. It warned the increase in demand for credit risk opinion from policyholders could “hamper” development of insurance in the GCC.

Top Of Their Game

Policy identifies the leading players across the Middle East insurance markets; focusing on the most powerful companies in each country and those individuals shaping the future of the industry.

Insurers To Form Joint Venture

Gargash Insurance Services Company is setting up a joint-venture operation in Oman with insurance broker Trade Links. The new firm, Gargash & Trade Links, will be headed by former New India Assurance Company resident manager Dr Retnakumar Janardanan as CEO and Ali Mohammed Mirza as chairman. Mustafa Vazayil of GISC is named vice president and Hani Ahhmed Mirza the new executive director.

First Takaful Put On Credit Watch

First Takaful Insurance has been put on credit watch by Standard and Poors following profitability concerns. S&P is monitoring the Kuwait-based insurer’s BBB- counterparty credit and insurer’s financial strength after its annual results for 2009 “raised concerns” about future earnings. Wolfgang Rief, S&P credit analyst, said the rating action mainly reflects the agency’s view of the “deteriorating underwriting performance of the takaful fund, poor investment results for both members and shareholders, and diminished growth in a very difficult economic and competitive environment”.

Salama Eyes Further UAE Growth

Salama Islamic Arab Insurance has opened two new branches in the UAE as part of a “major” Middle East expansion drive, the company revealed on Tuesday. The Islamic insurance provider said demand for Takaful products had prompted an increase in branches across the emirates from four to six. Dr Saleh Malaikah, vice chairman and CEO of Salama, confirmed that a further two would be added before year-end.

Zurich To Launch Life Product In Summer

Zurich International Life is launching a new life insurance product in the Middle East in July. The insurance provider, which has had a presence in the region since 1986, has revealed it is bringing a new life proposition to the market at the beginning the month. Graham Morrall, Zurich International Life regional director for the Middle East, would not elaborate on product details, but said: “There is a lot of product innovation going on and there is even more to come. We will have a product launch early summer for a life product we believe will be market leading and very exciting.”

GCC Growth Hampered By Low Populations

Low population numbers in GCC countries is restricting the scale of growth throughout the region’s insurance markets, an A.M Best Co report has claimed. The credit rating agency also said “fierce” competition among local insurers was hampering growth in some segments. “Foreign insurers and reinsurers are aware of the opportunities the GCC offers in comparison with the West’s stagnant insurance markets. However, competition, particularly among local insurers, remains one of the biggest challenges to companies operating within the GCC,” said Yvette Essen, head of market analysis for A.M. Best’s global financial services division.

A Sophisticated But Crowded Market

Despite the current buzz of excitement surrounding the Hashemite Kingdom of Jordan as it hosts this month’s GAIF Conference by the Dead Sea, most of the kingdom’s insurers will nonetheless return to their offices once the event is over still resigned to the probability of their business proving little easier in 2010 than it was last year. Intense competition and government regulation together continue to constrain premium rates while costs rise due, for example, to increasingly steep increases in health care expenses, and steadily rising staff bills as insurers pay more and more to prevent their best employees moving abroad to work in burgeoning GCC insurance markets.

OIC Board Resigns But Business As Usual

Oman Insurance Company has been placed on credit watch negative by ratings agencies Standard and Poor’s and AM Best after the entire board of directors resigned. S&P has placed the insurer’s BBB+ long-term counterparty credit and insurer financial strength ratings on credit watch negative while it reviews the reasons behind the resignations. AM Best has also placed the insurer’s financial strength rating of A excellent and the issuer credit rating of “a” under review with negative implications. The credit watch placement by both agencies follows the unexpected resignation of the board of directors of the company in April.

Credit Rating Boost For Arab Orient

AM Best Co has upgraded the financial strength of Arab Orient Insurance Company from stable to positive. The ratings agency has upgraded the insurer to B++ from B+, and has upgraded its issuer rating to bbb from bbb-.
AM Best says the upgrade reflects Arab Orient’s strong risk-adjusted capitlisation, strengthened leading business position in its domestic market and continued resilient operating performance.

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