S&P Global Ratings said that the ratings on insurance companies in the Gulf are not immediately affected by the growing geopolitical tensions in the region following the assassination of Iranian general Qassem Soleimani and the ongoing fallout between the two countries.
“We maintain our view that any military action by either side will be limited, and will not lead to a fully-fledged, direct military confrontation”, the ratings agency said in its latest report.
S&P’s ratings on Gulf sovereigns already take into account the region’s geopolitical volatility. It also does not believe that the current political tensions will have an immediate impact on the business risk and financial risk profiles of insurers in the region. However, a further escalation of the conflict could undermine confidence and investment in the region and lead to a slowdown in economic growth and more volatility in the region’s stock markets, affecting business volumes and putting pressure on both investment returns and capitalization levels.
Reinsurers are also likely to review rates for war coverage, as was the case following the attacks on oil tankers in the Strait of Hormuz in 2019.
