Best’s Special Report: Rated MENA Companies Maintain Strong Capitalisation Levels Despite Stifled Growth

LONDON–(BUSINESS WIRE)–Companies operating in the Middle East and North Africa (MENA) region
have encountered supressed growth rates as economic and political
uncertainties persist, although entities rated by A.M. Best have
broadly maintained strong balance sheets.

A new Best’s Special Report, titled, “Rated MENA Companies
Maintain Strong Capitalisation Levels Despite Stifled Growth,” states as
the MENA region has historically been heavily influenced by oil prices,
a decline from the high levels reached at the end of 2014 has impacted
economic development and fiscal budgets remain under pressure.
Governments have cut back on major infrastructure projects in recent
years, leading to a depressing effect on insured values and insurance
activity – particularly for property, engineering and construction lines.

Sentiment and investment in the region has also been affected by ongoing
political instability and conflict. In 2017, the majority of A.M. Best’s
ratings actions were affirmations (81%), with upgrades (8%) outweighing
downgrades (2%).

Greg Carter, managing director, analytics, said: “In the past year, A.M.
Best has undertaken a mixture of upgrades and downgrades for
(re)insurers operating within difficult market conditions throughout the
MENA region. For some companies, business volumes are under pressure and
earnings are declining, but in general, rated entities have maintained
strong capital positions.”

The report states that fierce competition and pricing pressure remain in
many segments and markets in the MENA region. A.M. Best expects
regulatory changes will put further pressure on capital and in the
short-term, MENA (re)insurers are likely to continue to feel the impact
of the economic slowdown, currency depreciations, austerity measures and
volatility in equity and real estate markets.

Yvette Essen, director, research and communications, and report author,
added: “Despite the various challenges facing (re)insurers, in A.M.
Best’s opinion, there are pockets of opportunities if companies can be
selective in their underwriting approaches, focusing on specific
products and territories, or even through successful distribution
platforms. They could examine portfolio consolidation and a realignment
of strategy, and innovate into niche and non-traditional lines. There
may also be greater demand for insurance related to alternative energy
sources.”

To access a complimentary copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=270211.

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.

ALL RIGHTS RESERVED.

Contacts

A.M. Best
Greg Carter, +44 20 7397 0288
Managing
Director, Analytics
[email protected]
or
Yvette
Essen, +44 20 7397 0322
Director, Research & Communications –
Europe,
Middle East & Africa
[email protected]
or
Edem
Kuenyehia, +44 20 7397 0280
Director, Market Development &
Communications
[email protected]
or
Jim
Peavy, +1 908 439 2200, ext. 5644
Director, Public Relations
[email protected]