Insurers in the Gulf Cooperation Council (GCC) are likely to maintain stable credit profiles despite the ongoing conflict in the Middle East, international credit rating agency S&P Global Ratings said.
The agency stressed that its assessment is shaped by considerable uncertainties about how long the conflict will last and how far its effects may spread across the economy and financial markets.
S&P Global Ratings said its base case assumes relatively limited military activity lasting about two to four weeks.
However, the agency stressed that secondary impacts, including intermittent security incidents and wider regional disruption, could extend beyond this time frame. Given these uncertainties, S&P Global Ratings noted that its forecasts remain subject to revision as new developments emerge.
In its analysis, S&P Global Ratings highlighted that most rated GCC insurers have accumulated strong capital positions in recent years, which should enable them to absorb potential shocks from market volatility or conflict-related claims.
According to S&P Global Ratings, direct exposure to war-related losses is generally limited because standard insurance contracts exclude such exposure, while specialty policies are typically transferred to global reinsurers. S&P Global Ratings explains that this structure significantly reduces the net risk retained by regional insurers.
S&P Global Ratings highlighted that any claims arising from the conflict are most likely to affect specific sectors such as maritime, aviation, energy and cyber insurance. Even within these ranges, S&P Global Ratings believes the financial impact on GCC insurers is contained due to extensive reinsurance protection.
The agency also drew attention to the potential consequences of prolonged disruption to major trade routes. S&P Global Ratings noted that a prolonged closure of the Strait of Hormuz could lead to supply chain constraints and higher import costs, particularly for auto parts.
This could put upward pressure on auto insurance claims, an area that accounts for a large portion of premium revenue in the region. Still, S&P Global Ratings added that weaker economic activity and reduced travel could lower traffic volumes, potentially offsetting an increase in claims frequency.
From a profitability perspective, S&P Global Ratings expects underwriting results in 2026 to be broadly consistent with the previous year. However, S&P Global Ratings noted that profitability may vary across markets and that despite Saudi Arabia’s greater reliance on lower-margin health insurance business, its performance may continue to lag regional peers despite some pricing adjustments in auto lines.
S&P Global Ratings further reported that revenue growth in the GCC insurance industry will slow in 2026 after a period of strong expansion. The agency predicts that premium growth in Saudi Arabia and the United Arab Emirates may reach around 5%, while growth in other markets may slow.
S&P Global Ratings tied the outlook closely to the duration of the conflict, noting that a quicker resolution could support a recovery in consumer confidence and economic activity.
Meanwhile, S&P Global Ratings observed that demand for war risk insurance is likely to increase, particularly in markets such as the UAE, which are considering broader underwriting frameworks. S&P Global Ratings said this could provide selective support to insurers active in this segment, partially offsetting weaker demand elsewhere.
On the credit quality front, S&P Global Ratings said the outlook for most rated GCC insurers continues to be stable, reflecting strong earnings and strong capitalization. The agency noted that a large proportion of insurers demonstrated the highest levels of capital adequacy in the 2025 assessment, bolstering the sector’s resilience.
However, S&P Global Ratings warned that financial market volatility remains a key vulnerability. The agency warned that a sharp decline in real estate or equity markets could weaken capital positions, particularly for insurers with higher exposure to these asset classes. S&P Global Ratings also highlighted that tighter financing conditions could make it more challenging for weaker companies to rebuild capital buffers when needed.
Overall, S&P Global Ratings believes that GCC insurers are well-positioned to navigate the current environment, with credit conditions expected to remain stable in the short to medium term, unless the conflict intensifies significantly or becomes prolonged.
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