Qatar Re tops A.M. Best’s tally of the biggest Middle East and North Africa reinsurers in 2015, capping major growth for the carrier that has run in tandem with a significant expansion of the larger regional market.
The carrier formally known as Qatar Reinsurance Company booked more than $1.15 billion in gross written premiums and $343.4 million in net written premiums during 2015, A.M. Best said.
Qatar Re’s results reflect a 116 percent jump in gross premiums written over the previous year, A.M. Best said in its annual reinsurance industry review.
Qatar Re’s top spot overshadows the number two Middle East/North Africa reinsurer almost by half. Trust Re, or Trust International Insurance & Reinsurance Co. B.S.C., is second on the list, with $475.9 million in gross written premiums, and $299.5 million in net written premiums during 2015.
To put that in perspective, Qatar Re landed at number 35 in A.M. Best’s tally of the top 50 global reinsurance groups (both life and non-life) contained in the report, a gain of 15 slots over the previous year. It is still a relatively small reinsurer, however, compared to Munich Re, the world’s largest. Munich Re claimed the top spot with $36.9 billion in life and non-life gross written premium for 2015, and nearly $35.3 billion in net written premium.
Why such a huge gain? A.M. Best credits Qatar Re’s advance with “an aggressive growth strategy backed by a robust backing of capital.”
Qatar Re’s advance has happened as insurance markets in the region saw significant growth over the last 10 years, the A.M. Best report noted.
Consider: Insurance premiums for the Middle East/North Africa surpassed $52 billion in 2015, though A.M. Best points out that Turkey, the United Arab Emirates, Saudi Arabia and Iran remain the largest markets. A number of factors are driving those market gains, including more insurable risk due to higher insurance penetration, oil prices that reached historic levels leading to 2014, and new compulsory covers for medical healthcare and liability business classes.
Infrastructure development and more commercial activity are also driving the market, A.M. Best said in its report.
While the Middle East/North Africa reinsurers have experienced healthy growth, A.M. Best said their gains come with a few catches.
For one thing, regional reinsurers have relatively small profiles compared to their larger, international peers. As A.M. Best explains, most of ceded premiums are placed on the international market, and primary insurers/reinsurers keep limited risk.
While Qatar Re and others have seen robust growth, A.M. Best said that their expansion has come from “tapping global insurance markets as opposed to it arising from the region.”
Still, A.M. Best adds that most of the regional market is open “with few restrictions on reinsurance operations.” International reinsurers have also seen opportunity in the market as well.
But the Middle East/North Africa offer plenty of challenges too. A.M. Best lists several, including the continued influx of capacity from multiple fronts, a higher frequency of large losses, low oil process affecting both insurable risk and investment markets, and political instability/social unrest.
A.M. Best also cites low insurance premium rates and weak risk management/mitigation practices as problems that make the Middle East/North Africa market more difficult.
A.M. Best’s full report is called: “Innovation: The Race to Remain Relevant.”
Source: A.M. Best