Anticipated new and tougher regulations in Kuwait could lead to some capital raising and consolidation in 2021, says S&P Global Ratings.
Mr Emir Mujkic, director - lead analyst, Insurance Ratings at S&P Global Ratings, said in the report “GCC Insurers In 2021 - Robust Capital Supports Credit Quality” released last month, 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 0.6 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.”