S&P Global Ratings expects earnings to rise modestly if insurers continue to reprice underperforming businesses.
Earnings should also be supported by higher investment returns after rising interest rates, said Emir Mujkic, credit analyst at S&P Global Ratings.
S&P Global Ratings said in a note titled “Slideshow: GCC insurers to 2023: Strong growth and subdued earnings could squeeze capital buffers”.
Premium income
“Profitability declines in most GCC markets in 2022 despite higher premiums,” Mujkic said.
The combination of strong premium growth, relatively modest earnings and continued high costs of meeting new accounting standards and other regulatory requirements could squeeze capital and solvency buffers. As the market becomes more fragmented, we expect many smaller and mid-sized insurers to feel these impacts the most.
Mujkic added: “While we expect the ratings of the larger, higher-rated insurers in our portfolio to remain broadly stable, the credit strength of many smaller and mid-cap insurers is likely to weaken, leading to further financing and consolidation in the sector .” trade arab news agency