AM Best is maintaining its outlook for the insurance markets of the Gulf Cooperation Council (GCC) at stable.
In its new Best’s Market Segment Report, “Market Segment Outlook: Gulf Cooperation Council Insurance”, AM Best notes that while GCC insurers remain vulnerable to second-order effects from the Middle East conflict, strong performance and healthy risk-adjusted capitalisation leave many of them well-positioned to withstand geopolitical headwinds, although the impact of an extended conflict in the region could pose significant challenges.
Also noted by AM Best’s analysts is the segment’s reliance on reinsurance, primarily to support specialty, commercial property and engineering lines of business. Should attempts to de-escalate the U.S.-Israel conflict with Iran prove unsuccessful, reinsurance renewals will be a critical inflexion point for the sector, with reinsurers possibly looking to re-evaluate their risk appetites. This could lead to a reduction in available capacity, higher pricing, and changes to terms and conditions, exclusions and event limits.
