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May 2021

Kuwait: New stricter regulations could accelerate insurance M&A

Source: Middle East Insurance Review | Apr 2021

Anticipated new and tougher regulations in Kuwait could lead to some capital raising and consolidation in 2021, said S&P Global Ratings.
In a recent report on GCC insurers in 2021, S&P Global Ratings director - lead analyst, Insurance Ratings Emir Mujkic said that insurers in Kuwait tend to maintain lower capital buffers than peers in other markets, which makes their credit quality more sensitive to fluctuations in capital and earnings and a weak economy.
Commenting on the performance of the insurance sector, Mr Mujkic said, “We estimate that the insurance market expanded by about 5% in 2020 mainly due to an increase in premiums from the medical scheme for retirees (AFYA), which is written by only one insurer.
“We expect GWP growth of about 5% in 2021, as the number of retirees increases, leading to higher GWP in the AFYA scheme. We anticipate that government-sponsored infrastructure projects and higher reinsurance rates will also support GWP growth.
“As in other markets, a decline in motor and medical claims led to stronger underwriting results in 2020. We expect the overall combined ratio for the market to settle at 95%-97% in 2021.” M 
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