The price increases, regulatory enforcement as well as merger and acquisition (M&A) activity and the favourable economic conditions have boosted the insurance revenue of 76 listed insurers in GCC for a second consecutive year in FY 2023, according to a report by research and consulting practice Insurance Monitor in association with Lux Actuaries and Consultants.

 

Their combined insurance revenue jumped by 19% to $32.2 billion in FY2023 compared to $27.1 billion in the previous year, with the market growth spearheaded by regional heavyweights Saudi Arabia and UAE, stated Insurance Monitor in its 'FY2023: GCC Performance Periodical.'

 

On Saudi Arabia, the experts said the insurers in the kingdom generated revenue growth of 27% in FY2023. "They chalked up a whopping combined net profit of $861 million with all 25 insurers showing profits as combined ratios improved and investment income more than doubled," they stated.

 

"Despite the growth in earnings, solvency deficits have been reported by three Saudi insurers while several other insurers are working towards capital increases ahead of the new minimum capital requirement to take effect from 15 December 2024," they added.

 

The year also saw the start of operations of the Insurance Authority in KSA, a significant structural reform to pave the way for regulatory independence and sectoral advancement. 

 

Other notable developments that would foster sustainable sector growth include the issuance of a licence to Saudi Mortgage Guarantee Services Company (Dhamanat) in July 2023, a company owned by the Real Estate Development Fund, to conduct life and non-life insurance business in KSA.

 

In 2023, Cigna was granted the first foreign branch licence to commence operations in the kingdom, said the experts.

 

On the UAE market, the Insurance Monitor report said its listed insurers have likely increased market share by three percentage points with a 20% growth in revenue that has outpaced the total market growth of 12.7% in FY2023.

 

However, about one-third of the listed insurers in the UAE reported losses and solvency deficits, it stated. 

 

Recurrent losses and prolonged breach of solvency regulations have triggered adverse rating actions for at least four insurers in the UAE including two consecutive downgrades in less than 12 months for Insurance House, A billionIC and Fidelity United, it added.

 

On Qatar, the Insurance Monitor experts said the country's general insurance and reinsurance company QGRI's financial results draw attention as the insurer booked hefty losses in the last quarter of the year due largely to unrealised investment losses in its real estate portfolio. 

 

QGRI’s results shifted the combined earnings of Qatar’s listed insurers to a loss of QR390 million ($107 million) for the full year from a profit of QR940 million for the first nine months of 2023.

 

For the rest of the region, the growth in earnings has been largely sustained by strong investment returns while underwriting performance has generally weakened with the highest deterioration of 3.8% points observed in the UAE, stated Insurance Monitor in the report.

 

"An example is Oman, where the combined net profit of listed insurers rose by 19% to RO19.5 million ($50.8 million) in 2023, boosted by a 32% increase in investment income that was largely generated by the sultanate’s top three insurers," said its experts.

 

For Liva, Oman’s biggest insurer, FY2023 was conceivably a foundational year following the acquisition of RSA Middle East in July 2022, large-scale regional integration and group rebranding, that converted to an increase of 43.2% in revenue, they stated.

 

Insurance Monitor pointed out that growth in revenue and net profit averaged 16.6% and 9.6% respectively for GCC-listed insurers on the exclusion of their Saudi and Qatari peers. 

 

Such growth also included the post-acquisition results of merged/acquired entities that are not entirely reflected in the comparative period, so the comparative figures are not entirely comparable. 

 

Earnings have been largely sustained by a significant increase of 92.4% in investment income while underwriting performance has generally weakened, it added.-TradeArabia News Service