S&P: GCC insurance sector likely to grow supported by Saudi market

S&P Global Ratings expects the insurance sector in the Gulf Cooperation Council (GCC) countries to grow by about 15% to 20% in 2024, with revenues exceeding $20 billion.

The agency said that the Saudi market is seen to be the main driver of revenue growth in the GCC region, similar to the past two years, as it is the largest insurance market in the region and will continue to benefit from high economic growth.

The rating firm added that the Saudi insurance market witnessed an increase in demand and written premiums due to implementing compulsory motor insurance and adding new medical coverages within the compulsory coverages.

Meanwhile, S&P still believes that the current year will be another strong year for the sector in general, with the possibility of achieving higher profits compared to those recorded in 2023.

Although Saudi insurance companies witnessed an increase in profits to $588 million in H1 2024 from about $450 million during the same period in 2023, 14 out of 25 listed companies saw a decline in profits, which indicates increased competition, the rating house indicated.

The firm further noted that strong competition and increasing regulatory requirements led to many mergers, indicating that over the past five to six years the number of listed Saudi insurance companies decreased by about 20% from 34 to 27 companies.

S&P also expected that mergers between insurance companies would continue, especially in Saudi Arabia, the UAE and Kuwait, where many insurance companies are still failing to meet the capital requirements.

The agency, however, does not expect any major rating actions during the next six to 12 months, as most of the rated insurance companies have sufficient capital.