Covid-19-driven financial market volatility is expected to negatively impact solvency levels of Bahraini insurers this year, adding to the challenges faced by the kingdom’s (re)insurance sector, said global credit rating agency AM Best in a new report.

The special report titled “Covid-19 Adds to Challenges for Bahrain’s Fragmented Insurance Market” notes the Bahraini (re)insurance market is very competitive, with a large number of companies vying for a limited amount of premium.

The report explains Bahraini insurers typically take more asset risk than their peers in mature markets. In particular, exposures to equities and real estate are generally higher among Bahraini insurers than among insurers in developed economies. As a result, their performance is heavily influenced by investment results and prone to volatility driven by financial market movements.

While the good solvency buffers of the large Bahraini insurance companies will allow them to absorb these types of financial market shocks, there is concern as to how insurers with lower solvency levels will cope with additional stresses in the short term, particularly in the event of a second wave of Covid-19 infections later in the year. – TradeArabia News Service