Corona threatens the profits of insurance companies in the Gulf

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Standard & Poor’s credit rating agency said on Wednesday that the repercussions of the Coruna epidemic and the decline in oil prices threaten the profits of insurance companies in the Gulf region, which could lead to negative measures in the corporate credit rating.”Most of the insurance companies that we classify in the Gulf Cooperation Council region benefit from strong capital bumpers, and they should be able to absorb the claims associated with Covid-19 and the volatility of the capital market,” the agency said in a report, according to Reuters.

The credit rating agency added that “the large decline in stock markets, the widening difference in bond yields and the continuous decline in real estate prices will damage the profits and fenders of capital with insurance companies with a significant exposure to these categories of assets.”

Quarterly losses

The five major stock exchanges in the region that pumps a fifth of the world’s crude oil needs declined in the first three months of the year, with the Dubai market losing more than a third of its value.

The majority of the losses came in March, which witnessed the collapse of the OPEC + agreement to reduce production, and the oil price war between Saudi Arabia and Russia, in addition to a series of closures to counter the outbreak of the Corona virus, which caused the suspension of most companies.

The Dubai Financial Market came first in losses, with losing 36% of its value since the beginning of the year, followed by Abu Dhabi, which fell 26.4%. In March, the two markets recorded their worst performance in ten years, according to CNBC.

The largest real estate company in the UAE, “Emaar”, decreased by 45% in the first quarter.

The Saudi capital market, Tadawul, the largest in the region, lost 22.5 percent to end the first quarter of the year, at the lowest rate since November 2016.

Whereas, Saudi Aramco, the oil giant in the Kingdom, lost 15.3% since January to 30.15 Saudi riyals ($ 8), at a price lower than its listing price of 32 riyals (8.50 dollars) per share.

The main Kuwait market index declined by 24.1% and the Qatar Stock Exchange index 21.3%, and the Bahrain and Oman stock exchanges also fell by 16.1% and 13.4%, respectively.

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