Lebanon: Ministry bars insurers from distributing dividends
Source: Middle East Insurance Review | Apr 2020
The Ministry of Economy & Trade has barred insurers in Lebanon from distributing dividends to shareholders for financial year 2019, or any dividends accumulated in previous years, said a report by the Economic Research & Analysis Department of Byblos Bank.
The ministry also instructed insurers to refrain from settling payments to related parties without the approval of the Insurance Control Commission (ICC), regardless of the nature and type of the payment, or whether or not the payment is justifiable.
The ministry issued the decisions based on a proposal from the ICC in order to preserve the solvency of insurers amid the prevailing challenges facing the country.
Insurers face growing uncertainty
In another report, AM Best said the Lebanese insurance market has been facing mounting uncertainty, amid increased social, political and economic instability in the country since last October.
The recent civil unrest and a ballooning public debt have increased the level of economic uncertainty in Lebanon, which is negatively impacting the credit quality of Lebanon’s insurance market said the rating agency.
In contrast with the wider MENA region, the agency said the Lebanese insurance market overall has an asset allocation that favours high levels of cash and fixed income instruments over higher-risk investments.
Nonetheless, the vast majority of Lebanese insurers’ investments are exposed to domestic issuers, and consequently to the socio-economic and political turmoil the country is experiencing. Specifically, uncertainties regarding the credit quality of Lebanese government debt pose the most imminent threat to domestic insurers’ balance sheets. M