Warning about the impact of Corona on the profits of Gulf insurance companies

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Standard & Poor’s credit rating agency said that the repercussions of the Corona pandemic 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 should be able to absorb the claims associated with Covid-19 and the volatility of the capital market,” S&P added in a report.
The credit rating agency added, “But the large decline in the stock markets, the widening difference in bond yields and the continuous decline in real estate prices will damage the profits and fenders of the insurance companies with significant exposure to these categories of assets.”
S&P added that the continued volatility in the market is the most likely reason for the deterioration of the credit conditions of insurance companies and may lead to negative measures in the credit rating of these companies. The agency will closely monitor the impact of the epidemic on insurance company activities and the financial risks it faces.
She said that many Gulf insurance companies still have a relatively high exposure to high-risk assets, and added that pandemic containment measures and a historical decline in oil prices may lead to “a significant increase in liquidity problems or even defaulting between non-financial institutions”, and therefore they You expect a slowdown in the collection of premiums as companies try to postpone payments.
“This may put additional pressure on liquidity management and the quality of insurance company assets in the coming months,” the agency said.

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