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MENA FOCUS

MENA reinsurance market
Performance under pressure

Weak technical performance is driving MENA-based reinsurers towards the Mr Myles Gould Mr Mahesh Mistry
Asia Pacific and other territories in search of higher-margin business, say
Messrs Myles Gould and Mahesh Mistry of A.M. Best.

The low level of insurance penetration seen in many region from both international and regional reinsurers remains
MENA countries, combined with the robust, albeit well in excess of local demand, resulting in the continued
deteriorating, profitability achieved by the leading exacerbation of the current competitive pricing environment.
primary insurers, has made the region a target for both MENA reinsurers’ underwriting performance
international and domestic reinsurers. deteriorates
It is important to recognise that there has been a more
Exhibit 1 shows the largest MENA-domiciled reinsurers general shift in underwriting performance across the regional
ranked by GWP in 2014. Despite the growing presence and reinsurance segment. The weighted average combined ratio
capacity provided by regional reinsurers, their profiles remain for reinsurers domiciled in the MENA region has deteriorated
small compared with international peers over the past three years, falling from 96% in 2012 to 103%
in 2014. This is in marked contrast to the global reinsurance
In A.M. Best’s opinion, while lower oil prices cannot market, where technical margins have remained robust and
be disregarded as a factor affecting economic growth in improved over the same period, following the absence of
the MENA region, the impact on the (re)insurance sector is major catastrophes. The performance of MENA reinsurers is
expected to be minimal over the medium term. Even in the highlighted in Exhibit 2.
case of moderate economic contraction arising from persisting
low oil prices, A.M. Best believes there is still opportunity for The weakening performance, whilst in part continuing
increased insurance demand in the region, given the low levels to reflect overcapacity and prevailing competitive pricing
of insurance penetration and continued rollout of compulsory conditions, has also been driven by a higher frequency and
insurance. severity of large losses stemming from the MENA markets.
Typically, these losses have emanated from commercial
Whilst the size and the sophistication of the MENA insurance property lines, including fire, engineering and industrial risks,
market has increased notably over the past decade, it remains with business interruption also being a significant contributor to
both developing and dependent on international reinsurance the overall cost of claims. As a consequence, some (re)insurers
support, with local and regional reinsurers generally acting have started to become increasingly selective in the risks they
in a follower capacity. Whilst some reinsurers have exited the
market, the number of new entrants is far greater than those
leaving. Consequently, reinsurance capacity in the MENA

Exhibit 1: MENA reinsurers – Largest domiciled writers by GWP, 2014

Company Abbreviation Gross written premiums Net written premiums
(US$ million) (US$ million)
178.2
Qatar Reinsurance Company LLC Qatar Re 535.9 286.6
354.6
Trust International Ins & Reins Co. B.S.C. (c) Trust Re Trust Re 444.9 260.4
154.1
Milli Reasurans Turk Anonim Sirketi Milli Re 412.6 143.5
201.1
Arab Insurance Group (B.S.C.) ARIG 315.3 137.1
103.7
Compagnie Centrale de Reassurance CCR Algeria 255.2 59.3
73.3
Societe Centrale de Reassurance SCR Morocco 239.2 13.6
27.4
Hannover ReTakaful BSC (c) Hannover ReTakaful 205.4 23.0

Saudi Reinsurance Company Saudi Re 148.3

Kuwait Reinsurance Company K.S.C.P Kuwait Re 117.0

Arab Reinsurance Company SAL Arab Re 81.6

Emirates Retakaful Limited Emirates Re 77.4

Gulf Reinsurance Limited Gulf Re 55.3

Societe Tunisienne de Reassurance Tunis Re 52.5

ACR ReTakaful MEA B.S.C. (c) ACR ReTakaful 41.3

Notes:
Excludes branches of reinsurers not domiciled in the MENA region. Premiums are not restricted to MENA region.
Excludes companies for whom financial data was not available.
Source: A.M. Best research

56 SIRC Supplement • November 2015 • www.asiainsurancereview.com Back to Contents