Gulf insurance firms expected to reinvest in US, Europe
Many Gulf insurance firms are expected to seek ways of diversifying and moving away from local equity markets in the gulf region which have faired poorly this year and instead invest in US or European bond markets.
“Gulf insurance companies are looking at ways to reduce their focus on equity markets,” said Kevin Willis of Standard & Poor’s, according to <i>Reuters</i>.
“The quality of underwriting earnings has been hidden by gains they are making from the equity markets. It’s been a giant cushion over the past couple of years,” Willis added.
Invested assets amounted to some $6 billion by the end of 2005 for Gulf insurers, while more than 70 percent of such assets were in cash and equities.
These assets are expected to grow, in part as a result of low premiums as compared to Europe; regional stock markets gained an average of 92 percent last year. However, steep drops in local bourses have led many to seek diversification.