MENA: A region conducive to the development of reinsurance
Despite the political context, the MENA zone’s potential remains high, with Middle East’s oil wealth and economic buoyancy of Gulf States raising hope for regular premium growth.
Another upside pertains to evolving legislation in major parts of the regional countries, which prompted for the creation of more insurance coverage, resulting in an influx of new reinsurance capacities.
MENA: Reinsurers subject to fierce competition
In Saudi Arabia, retention levels have been revised upwards following the obligation to place 30% of local business in the country. The substantial legal cession in Algeria has put foreign reinsurers in a highly competitive situation.
It is worth noting that local reinsurers are scrambling to get established outside their borders. The portfolio of MENA region reinsurers remained relatively stable between 2016 and 2017 with a total premium of nearly 2.2 billion USD. Trust Re, which is currently struggling with ratings given by S&P and AM Best [4], might face a difficult 2019 renewal, a situation that might be favorable to foreign reinsurers.
Globally, renewal conditions will remain quite difficult for all reinsurers in the MENA [5] region. The inflow of capacities from major international groups will not allow any increase in rates. Moreover, some direct insurers are embarking on the underwriting of facultative risks which they later place in their own reinsurance treaties.
Eventually, it is noteworthy that a new demand for reinsurance has emerged for:
- third party liability risks
- financial risks
- cyber risks