LONDON - Monday, April 22nd 2013 [ME NewsWire]
(BUSINESS WIRE)-- Many insurers in Saudi Arabia are reporting deteriorating underwriting results at a time when the market’s growth is slowing, according to a new report from A.M. Best Co. Analysis shows that in recent years the market’s combined ratio has been increasing, while real premium growth has decelerated, leaving insurers to compete mainly on price.
The report, titled "Insurers’ Profitability Under Pressure as Saudi Arabia’s Growth Slows,” states that Saudi Arabia has the second largest insurance market within the Gulf Cooperation Council (GCC), with total premium reaching SAR 20.3 billion (USD 5.4 billion) in 2012. Mahesh Mistry, director, analytics, said: "With the largest population in the region at 28.2 million inhabitants, the market is considered to have great growth potential with total insurance penetration – premium as a percentage of gross domestic product – relatively low at 0.8% in 2011.”
However, according to A.M. Best’s analysis, real growth rates indicate that the market has slowed down significantly during 2010 and 2011. Vasilis Katsipis, general manager, market development, A.M. Best - MENA, South & Central Asia, said: "In addition to the market’s slowing growth rate, many companies have also posted deteriorating profitability levels during this period. It is increasingly important for companies to identify strategies that combine growth with profits. Some insurers’ capitalisation has been eroded to such an extent that they no longer meet the regulatory minimum capital requirements.”
Large insurers with good technical expertise and a favourable market position are likely to continue to dominate the market. As Saudi Arabia’s insurance market matures, conditions are becoming increasingly competitive and profit margins are likely to reduce. A.M. Best considers that, in this environment, the main challenge for management over the coming years will be growing the business in accordance with business plans. Good strategic plans will enhance a company’s position, and it is likely that a number of small-to-medium size insurers will start specialising in specific market segments or product lines in order to outperform the market.
To access a complimentary copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=211417.
To view a video on the Saudi Arabia insurance market with Mahesh Mistry, go to http://www.ambest.com/v.asp?v=saudiarabia413.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
Contacts
A.M. Best Co.
Mahesh Mistry, +(44) 20 7397 0281
Director, Analytics
mahesh.mistry@ambest.com
or
Yvette Essen, +(44) 20 7397 0322
Director, Industry Research
Europe & Emerging Markets
yvette.essen@ambest.com
or
Vasilis Katsipis, +(971) 4375 2782
General Manager, Market Development, A.M. Best - MENA, South & Central Asia
vasilis.katsipis@ambest.com
or
Rachelle Morrow, +1-908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
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