DUBAI: Saudi insurers dominated earnings on Wednesday with a number of industry players reporting losses as fierce competition in the sector combined with the impact of the pandemic.
United Cooperative Assurance swung to a net loss of SR15.9 million in 2020 while Gulf Union Alahlia Cooperative Insurance full-year losses widened by 28 percent to SR39.4 million.
United Cooperative Assurance also reported a loss of SR15.9 million.
However Jeddah-based Aljazira Takaful Taawuni was among the groups that bucked the downward trend as profit rose 6 percent to SR40 million.
The Gulf insurance sector is defined by a large number of small operators which analysts say is ripe for consolidation.
“With the relatively large number of insurers in the region, some of which are small or posting losses, we expect to see further capital raising and consolidation, particularly in Kuwait and Saudi Arabia where regulators may introduce higher capital requirements,” S&P said in a report last month.
It added that ongoing high competition, a contraction in population of about 4 percent across the GCC on average, and economic uncertainty will weigh on growth prospects and earnings, while elevated asset risk could lead to further volatility in the coming quarters.
The coronavirus pandemic has had a mixed impact on the insurance sector. On one level the loss of jobs and the departure of hundreds of thousands of workers from the region has hit the number of premiums being written.
On the flip side, the pandemic has generated the need for new health policies while claims in areas such as motor insurance have declined sharply as more people worked from home and kept the car in the driveway.