Bahrain: Insurance sees return on equity of 5% for 2016-18
Source: Middle East Insurance Review | Jun 2017
The return on equity in the Bahraini P&C insurance industry is estimated to average about 5% annually in the 2016-18 period, nearly unchanged from 2015, but down from an annual average of 7.4% of the 2011-15 period, according to S&P Global Ratings in a recent report.
The industry’s GWP growth is expected to be less than 3% annually for the 2016-18 period, compared to the 1.9% in 2016 and the annual average of 8.9% for the 2013-14 period, due to a slowdown in economic activity.
The overall risk level of the P&C insurance sector in Bahrain has been assessed as “moderate”, according to the rating agency. The risk scale ranges from “low”, “intermediate”, “moderate” to “high”.
The industry risk assessment is supported by relatively modest profitability prospects and low product risks that are unlikely to cause volatility in the sector’s profitability. However, this assessment is constrained by modest growth in GWP and low barriers to entry in the overcrowded P&C sector, the agency noted.
The country risk for Bahrain is “high”, reflecting domestic political instability and a fiscal reliance on the hydrocarbon sector that has significantly deteriorated the Kingdom’s external financing conditions, S&P noted. M