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Kuwait Insurance Report Q2 2009Published by: Business Monitor International Published: May. 21, 2009 - 68 Pages Table of Contents
AbstractThe outlook for Kuwait has deteriorated markedly over the last quarter, with oil prices having fallenfurther, production set to contract under the new OPEC quotas, and the financial sector having seen somesignificant turmoil. We expect the expatriate population to shrink as jobs go (reducing the number ofconsumers), and personal wealth to contract in line with stock market and real estate asset losses. Thegovernment stimulus package will go some way towards keeping the economy afloat, in line with theview we have been promoting for a while for the whole of the Gulf region, but nonetheless, we expect theeconomy to contract by 1.0% this year, and recover only slowly going forward, as the unappealingbusiness and political environment keeps investors away.We now see real GDP growth coming in at -1.0% in 2009 and then 0.4% in 2010 - entirely on the back ofgovernment spending and ongoing momentum in gross fixed capital formation from projects which hadalready secured financing prior to the economic and financial turmoil. Consumer spending will contractby 2.0% in 2009 and remain flat in 2010 (unless the government resorts to introducing income tax, inwhich case it could decline even further). Thereafter growth in this component will remain very sluggish:we are forecasting 2.0% annually in 2011, followed by a small pick-up to 3.0% in 2012-2013, comparedwith 6.6% in 2006 (the last period for which we have data), and an estimated 10% and 6% for 2007 and2008 respectively. As elsewhere in the Gulf, the real estate sector will also contract in 2009, and possibly 2010 as well. Thegovernment took steps to prevent a bubble late last year, introducing new laws restricting sales andmortgages, and as such the sector has already had a significant correction: real estate sales volumes fellby 33% in 2008 compared to the previous year (with residential sector sales dropping 42% over the sameperiod). However, we do not think this will protect it from further downside going forward. With joblessexpatriates likely to return to their home countries, there will be reduced demand for homes and newsupply on the market (from vacated homes). Furthermore, banks will remain very wary of lending topotential home-owners in the current climate, with real estate exposure having contributed to the financialturmoil over the last few months, and property certainly not looking like a particularly safe investment atthe moment. In the Middle East and North Africa, we profile 17 companies. These are AGF, AIG, Allianz, Aviva,AXA, Cardif, ERGO, Eureko, Fortis, Generali, Groupama, HSBC Insurance, Liberty Mutual,MAPFRE, RSA, UNIQA and Zurich Financial Services. We also look at a number of the smaller localfirms that are active in the region, particularly in Kuwait, Oman, Saudi Arabia and the UAE. Over the course of 2008, actual total premiums in Kuwait rose by 1% to KWD198mn. Non-life premiumsrose by 1% to KWD142mn, while life premiums did not grow at all (0%) and remained at KWD56mn.Between now and the end of the forecast period, we expect that annual non-life premiums will rise byKWD237mn, while annual life premiums should rise by KWD40mn. Growth in non-life premiums should be driven by the general growth in nominal GDP: we are assumingthat non-life penetration remains constant at the current level of between 0.34% to 0.80%.Growth in life premiums should be driven by the change in the overall population and a rise in life densityfrom US$57.66 to US$90.00 per capita. BMI’s Insurance Business Environment Rating for Kuwait is 45.3. Get Full Details About This Report >> |
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