October 2015

Alpen Capital’s GCC Insurance industry report depicts the current scenario of the insurance industry across the GCC countries and major insurance segments, including life and non-life. The report also covers the recent trends, growth drivers, and challenges faced by the industry, in addition to presenting an outlook, in terms of premiums until 2020. It profiles some of the select insurance companies in the region, while evaluating their financial and valuation metrics.

Industry Outlook

The scale and growth of the insurance industry is strongly correlated with a country’s economy. The GDP of the GCC economies is strongly linked to oil prices. We have projected two possible scenarios for the growth of the GCC Insurance Industry based on the economic growth projection of IMF, growth in population and inflation levels.

As per our high growth scenario, the GCC insurance industry is expected to reach US$ 62.1 billion by 2020, registering compound annual growth rate (CAGR) of 18.7% for the period 2014-2020. IMF’s forecasted drop in the GDP of the GCC countries for 2015 and the volatility in oil prices are expected to result in lower growth in premiums for 2015. Between 2014 and 2020, IMF forecasts GDP growth in the region at a CAGR of 2.3%. Additionally, population growth is expected at a CAGR of 2.4% for the same period. The resulting improvement in insurance penetration and density levels (based on historical regression analysis) is likely to bring about growth in GCC insurance premiums for the period 2014-2020. Our conservative growth scenario, assuming that the GCC countries will average non-life premium growth in line with their preceding five years, results in the GCC insurance industry reaching a size of US$ 49.0 billion by 2020 at a 14.1% CAGR.

Growing at a CAGR of 20.2% between 2014 and 2020, the non-life insurance segment is likely to outperform the life insurance segment (CAGR of 5.9%), primarily due to its line of compulsory insurance products and encouraging regulatory reforms.

The insurance penetration in the GCC nations is expected to increase to 3.3% in 2020 from 1.4% in 2014. At the same time, insurance density is expected to more than double. In 2014, eight insurers in Saudi Arabia re-capitalized their balance sheet to comply with the regulatory requirements and fuel future growth, leading to an almost 14.0% increase in the Saudi Arabian insurance industry equity to US$ 2.7 billion. Saudi Arabia, the largest country in terms of population, is likely to overtake the UAE as the largest insurance market in the region and drive the growth of the GCC insurance industry between 2015 and 2020.

Qatar is one of the fastest growing markets and is likely to remain at the third position after the UAE and Saudi Arabia, with a market share forecast of around 10.0% between 2015 and 2020.

For more details please click here to access the complete version of the GCC Insurance Industry Report.