The latest financial results of 77 listed insurers across the GCC reveal a general decline in underwriting performance, with the Net Combined Ratio (NCR) rising by 1.3 percentage points, according to the "Q3 2024: GCC Performance Periodical" by Insurance Monitor in association with Lux Actuaries and Consultants.
This has led to a slowdown in average after-tax profit growth to 4.5% in the first nine months of this year (9M2024), compared to 8.0% in 1H2024, despite higher investment income.
In the UAE, losses have increased for several insurers since 1H2024, notably ALAIN (up by AED37m [$10.1m]) and ABNIC (up by AED23m) owing to motor and general lines of business.
In Saudi Arabia, earnings for insurers outside the top three players dropped by 28% due to an increase of 2.3% in the NCR for medical business.
Oman has seen total losses of $6m in 9M2024, despite a strong recovery from LIVA in the third quarter (Q3), which posted a profit of OMR5.3m ($13.8m) following significant weather-related losses in 1H2024.
In Qatar, while earnings grew by 18.1% in 9M2024, it should be noted that these results are reported under a material valuation uncertainty regarding QGRI's investment properties, which are scheduled for an independent annual valuation before the year-end. QGRI's concentrated real estate portfolio (100% local, with two properties accounting for over one-third of the insurer’s total investments) has experienced substantial revaluation losses totalling QAR2.4bn ($658m) over the past six years (2017-2023), including QAR1.3bn in 2023 alone, according to rating agency AM Best that maintains a negative outlook for the insurer.
Revenue
In terms of revenue, the region has seen an overall increase, with listed insurers registering a 13.9% growth in 9M2024. Higher rates following the adverse weather events in 1H2024, mandatory coverage, as well as market consolidation are underlying factors. It is interesting to note that UAE's revenue growth averages 15.5%, down from 21.8% when excluding ADNIC, whose results include those of its recently acquired Saudi subsidiary, Allianz (proposed new name: Mumtakalat Insurance Company).
In Qatar, however, the total revenue declined as QATI decides to reduce its exposure to underperforming international markets while strengthening its position in regional markets. Notably, QATI’s Gross Written Premium (GWP) from international markets declined by 32%, while domestic market GWP dropped by 9%. However, GWP from regional markets surged by 60%, reaching QAR2.7bn, largely accounted for by growth in medical business that is likely UAE-based. Excluding QATI, the revenue growth for other listed insurers in Qatar averages 12.0% during the period.
Capital and solvency
Losses have caused solvency ratios to deteriorate further for several UAE-based insurers, with at least eight in breach of regulatory requirements. Together, these insurers represent 12% of total insurance revenue in 9M2024. Notably, TAKAFUL-EM anticipates increasing capital to AED211m by the close of the rights issue subscription period on 26 November 2024.
In Saudi Arabia, SALAMA and Enaya await shareholders’ approval for proposed capital increases, with EGMs scheduled for late November 2024. At the same time, UCA and Gulf General cancelled their capital increase plans, citing improved profitability and the potential merger with Gulf Union Alahlia, respectively. The Saudi market is also evaluating at least two other mergers including MedGulf and Buruj which if completed is expected to improve the creditworthiness of MedGulf as the survivor, according to rating agency Moody’s.
Meanwhile, the UAE’s AMAN faces setbacks, with both TKFL and SALAMA terminating agreements to acquire AMAN’s insurance portfolios in 3Q2024.