LONDON-Saturday, March 24th 2018 [ AETOS Wire ]
(BUSINESS WIRE) --
Insurance companies in Lebanon continue to operate in a challenging
environment, with Lebanon’s history characterised by social and
political divides, and the country presenting high levels of economic,
political and financial systems risks, according to a new report by A.M. Best.
Furthermore, market fragmentation has led to significant competitive
pressures – particularly on the motor line of business, which has
suffered high combined ratios in the past five years. Pressures on
profitability have been accentuated further by competitive distortions,
with mutual insurers (caisses mutuelles) that benefit from not being
supervised by the insurance market regulator, the Insurance Control
Commission (ICC), proposing aggressive rates, especially on group
medical insurance.
The Best’s Special Report,
“Lebanese Insurers Continue To Demonstrate Resilience, Despite
Challenging Operating Environment,” states that against the background
of difficult wider economic and political conditions, the Lebanese
insurance industry has demonstrated resilience and has continued to
grow, albeit at a declining rate. Despite being a fragmented and
overcrowded market with significant competition and soft rates in
personal lines, it has remained profitable.
Alex
Rafferty, senior financial analyst, said: “The companies A.M. Best
rates in Lebanon have generally maintained solid levels of
capitalisation on a risk-adjusted basis. Likewise, the market as a whole
also exhibits an average solvency coverage ratio comfortably in excess
of local capital requirements. Furthermore, balance sheet strength is
aided by prudent investment allocation, with Lebanese insurers favouring
highly liquid investment portfolios, weighted toward cash and
short-term deposits.”
The
report adds that regulatory solvency is high on the agenda of industry
bodies, with the ICC advancing a project to introduce a risk-based
capital framework that A.M. Best views positively, as more stringent
regulatory solvency requirements would likely lead to increased
financial strength of the industry.
Ghislain
Le Cam, director, analytics, said: “A.M. Best expects that requirements
for strengthened governance frameworks would accompany solvency reform,
in line with what has been observed with the implementation of the
Solvency II regime in Europe. These would complement more vigorous
capital regulation with enhanced internal standards and capabilities
within insurance companies, notably as regards to capital and risk
management.”
To access a complimentary copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=271768.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates.
ALL RIGHTS RESERVED.
Contacts
For A.M. Best
Alex Rafferty, ACA
Senior Financial Analyst
+44 20 7397 0285
alex.rafferty@ambest.com
or
Ghislain Le Cam, CFA, FRM
Director, Analytics
+44 20 7397 0268
ghislain.lecam@ambest.com
or
Yvette Essen
Director, Research & Communications –Europe, Middle East & Africa
+44 20 7397 0322
yvette.essen@ambest.com
or
Edem Kuenyehia
Director, Market Development & Communications
+44 20 7397 0280
edem.kuenyehia@ambest.com
