AM Best's ratings of (re)insurers in the Middle East and North Africa (MENA) have generally trended positively. This is despite challenging regional geopolitical conditions, says the global credit rating agency.
In its new report, 'Benchmarking MENA Insurers Reveals Positive Trends Despite Regional Challenges,' AM Best notes that despite a turbulent period of geopolitical instability, (re)insurers in the region have shown their resilience, and some have even achieved improvements in their credit profile.
While risk management capabilities and awareness are steadily improving, the report notes that significant asset concentrations in high-risk investments, or exposures to less liquid investments, remain a key feature in the ratings of MENA (re)insurers.
This is of particular concern since such strategies can add significant volatility to operating performance and capital adequacy, and therefore, AM Best considers the adoption of prudent risk management practices across both underwriting and investing activities to be more critical than ever.