The aggregate net earnings of listed insurance companies in the GCC for 1Q2022 fell by 17.3% to $335.7m compared to $405.7m in the corresponding quarter of 2021, according to data compiled by Insurance Monitor.
The insurance research and consulting firm’s ‘Q1 2022 Performance Periodical’ published in association with Lux Actuaries & Consultants, said that underwriting performance weakened in the first quarter of the year across the region, particularly in Saudi Arabia, where the net combined ratio (NCR), reached 105.3%.
At least 21 listed insurers in the GCC region incurred net losses in 1Q2022 in Saudi Arabia (16) and UAE (5). The top three insurers in the region reported increases in net profit in 1Q2022 compared to the first three months of 2021 – Qatar Insurance Company (+12% $63m), Orient Insurance (+2% to $55m) and Gulf Insurance Group (+80% to $37m). The aggregate net earnings of the top 10 listed insurers in the GCC shrank by 13% to $227m in 1Q.
The data of a total of 81 listed insurance companies were examined. The distribution was 29 from the UAE, 26 from Saudi Arabia, 10 from Oman, and six each from Kuwait, Qatar and Bahrain. Excluded were Wafa and Al Sagr (both of Saudi Arabia) and AKIC (UAE).
Positive factors
The report said that improving economic conditions, hydrocarbon production increases coupled with higher oil prices, fading pandemic pressures and continued government efforts on fiscal and economic diversification made for a faster and stronger-than-expected economic recovery in most GCC countries especially Saudi Arabia over the last six months. This apart, growth in premiums has also been supported by a general increase in premium rates following rising loss ratios notably observed from 2Q2021 onwards.
New mandatory covers such as health in Oman and significant cross-border M&A activity are other factors that bolstered top-line growth.
The total GWP posted by the listed insurers stood at $9.2bn in 1Q2022 compared to $7.8bn in the corresponding period of the previous year. This includes the post-acquisition results of the operations of the former AXA in the Gulf region consolidated by Kuwait’s leading insurer, Gulf Insurance Group, that registered a 95% growth in top line in 1Q2022.
Net combined ratio
The NCR of the insurers covered by the report weakened by 3.4 percentage points in 1Q2022, despite the ongoing correction in premium rates. The NCR reached 100.5% in 1Q2022 compared to 100% as at end-December 2021 and 97.2% in 1Q2021. At least 41 insurers assessed in the report incurred technical losses during the first quarter of this year.
On a positive note, rising interest rates and capital market recovery bolstered the investment income of insurers. The listed insurers in the GCC as a group posted a 21.5% jump in the total investment income from $344m in 1Q2021 to $418m in 1Q2022. About 90% of this total was realised income. M