Amidst robust expansions in key markets, regulatory shifts, and strategic manoeuvres, the GCC insurance industry has undergone significant growth and transformation in the past year. The dynamic tableau it presents is ripe for analysis, especially considering the ongoing journey towards full compliance with the International Financial Reporting Standard 17 (IFRS 17).

In this blog, we delve into the transformative dynamics of the GCC insurance industry in 2023, highlighting remarkable growth, persistent challenges, and emerging trends that shape the regional landscape.

Record Growth and Key Drivers

The FY 2023 witnessed a substantial uptick in revenue for listed insurers across the GCC, increasing by 19% for a second consecutive year, to reach USD 32.2 billion. 

Several factors have contributed to the robust growth observed in FY2023. Price increases, a surge in demand spurred by regulatory enforcement, increased merger and acquisition (M&A) activity, and favourable economic conditions have all played pivotal roles. Gross Written Premium (GWP) estimates soared to USD 36.8 billion, indicating sustained momentum in the industry.

Performance Highlights

KSA emerged as a standout performer, with record revenue growth of 27% and a staggering net profit of USD 861 million. Notably, all insurers in the Kingdom reported positive net profits, with combined ratios showing an encouraging 3.1% improvement and investment incomes more than doubling. 

Meanwhile, the UAE market exhibited resilience, with listed insurers likely increasing market share by ~3% points with a 20% growth in revenue that has outpaced the total market growth of 12.7% in FY2023. Dubai Insurance Co.'s impressive performance propelled it to fourth place among UAE insurers, nearly doubling its book.

Challenges and Solvency Concerns

However, the journey wasn't devoid of challenges. QGRI’s substantial losses in Q4 2023 impacted Qatar's listed insurers, swinging combined earnings into negative territory. Although excluding QGRI showed an improvement in net profits, it highlighted the need for sustainable underwriting practices. Additionally, despite earnings growth, solvency deficits plagued some insurers in both KSA and UAE, underscoring the importance of financial stability.

Mergers, Acquisitions, and Strategic Moves

The landscape also witnessed strategic shifts, with several KSA insurers working towards capital increases following the termination of three mergers in FY 2023. Similarly, Oman's Liva Group saw a transformative year following strategic acquisitions and rebranding, reportedly propelling it into the ranks of the top 10 GCC insurers. This strategic move underscores the importance of agility and adaptability in navigating market dynamics.

Conclusion

As the FY2023 report unveils the dynamics of the GCC insurance landscape, it paints a picture of growth, challenges, and opportunities. While achievements in revenue and profitability are commendable, the industry must address solvency concerns, fortify underwriting practices, and embrace innovation to ensure long-term sustainability. By staying abreast of trends and leveraging strategic insights, insurers can navigate the evolving landscape and thrive in the competitive GCC market.

To explore a comprehensive analysis of the FY2023 GCC performance, we invite you to read the full report by Insurance Monitor and Lux Actuaries and Consultants. 

Click here to access the report published by Insurance Monitor in conjunction with Lux Actuaries.