GCC insurers likely to face credit risk over next year, says Moody’s

Most GCC insurance companies will likely face moderate to high credit risk over the next 12 to 18 months, Moody's Investors Service said in a report.

Growth in GCC insurance premiums declined to 14 per cent in 2015 from 17 per cent in 2013, due to lower oil prices and slower economic growth.

"Weak oil prices and high exposure to volatile investment assets are driving credit risk for GCC insurers. These factors are partly offset by the low insurance penetration across the region and improving insurance regulation," says Mohammed Ali Londe, Assistant Vice President - Analyst at Moody's.

The risk is greatest for insurers in Oman, Bahrain and Saudi Arabia, reflecting those countries' oil dependence and high break-even oil prices, the rating firm said.

Since insurance penetration is below 2 percent in most GCC countries, Moody's expects insurance premiums to keep growing at a double digit rate, despite weak oil prices.