GCC: ESG considerations have neutral to low credit impact for most insurers in the region

Source: Middle East Insurance Review | Apr 2023

The impact of ESG considerations on the credit strength of most insurers in the GCC countries is neutral to low, according to Moody’s Investors Service.

The insurers have good risk management and governance helping to offset their moderately negative exposure to environmental and social risks.

Moody’s assigns scores to 20 insurers in the GCC that reflect their exposure to ESG considerations (Issuer Profile Scores – IPSs) and the effect of these exposures on their credit ratings (Credit Impact Scores – CISs). For 15 of these insurers, ESG considerations have a neutral to low impact on their current ratings (CIS-2). For three insurers, exposure to governance considerations overall has a moderately negative impact, with greater potential for negative impact over time (CIS-3). The impact is highly negative (CIS-4) for one insurer, and very highly negative (CIS-5) for another, both rated as non- investment grade.

Risk exposure

Environmental risk exposure is moderately negative for GCC insurers, said Moody’s. GCC insurers are exposed to physical climate risk through their property insurance portfolios, which are vulnerable to weather-related losses, including natural catastrophes. M

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