Doha: S&P Global Ratings said yesterday that Qatar and Saudi Arabia’s reopening of their airspace and sea and land borders could have a positive effect on the business growth and investment returns of Qatari insurers in the medium term.
“We anticipate that the restoration of ties between Qatar and Saudi Arabia, as well as with the other countries that had severed relations with Qatar, including Bahrain, Egypt, and the United Arab Emirates, will improve political and economic collaboration within the Gulf Cooperation Council (GCC) and wider region,” said S&P Global Ratings in a report yesterday.
It added that over time, Qatari insurers are likely to benefit from more regional travel, tourism, and possibly trade, which could lead to an increase in insurable risks and consequently premium income. More foreign investment could also improve Qatari insurers’ asset prices and investment returns, since most of their investments are held in Qatar and investment income is a key contributor to their overall earnings.
It also said that the restoration of ties between Qatar and the four Arab countries will improve political and economic cooperation within the Gulf Cooperation Council (GCC) region.
“In our view, Qatar’s intraregional travel, tourism, and real estate sectors will benefit most, although the impact on bilateral trade could be marginal. Trade between member states is relatively limited given the almost uniform concentration of GCC member states’ exports on hydrocarbons and the lack of strong agriculture or manufacturing sectors in the region,” it said.
“Our stable outlook on Qatar currently indicates our view that, despite lackluster growth prospects and still-low hydrocarbon prices, Qatar’s credit profile will remain resilient, supported by its wealthy economy, and strong government and external net asset positions,” it added.
