Real GDP in the GCC countries will likely recover to about 2% in 2021 on average, after the sharp contraction in 2020, but we believe that key sectors, particularly real estate, hospitality, and retail, will remain under pressure this year, stated S&P
in its "GCC Insurers In 2021: Robust Capital Supports Credit Quality
Ongoing high competition, a contraction in the population of about 4% across the GCC on average, and economic uncertainty will weigh on growth prospects and earnings, while elevated asset risk could lead to further volatility in the coming quarters, said the expert.
With the relatively large number of insurers in the region, some of which are small or posting losses, we expect to see further capital raising and consolidation, particularly in Kuwait and Saudi Arabia where regulators may introduce higher capital requirements, it added.
The report cites the main risk for GCC insurers as a potential return of volatility in capital markets, which could weaken credit conditions for insurers in 2021, particularly if central banks gradually lift forbearance measures later this year.
Among the opportunities for GCC insurers is a large uninsured population; higher awareness of insurance products and the need for protection among the population could increase the demand for medical and critical illness policies covering Covid-19 and other pandemics.