Abstract
We believe that the UAE will avoid an economic contraction in 2009, but only
just. Further negative
news in the property market has shaken investor and
consumer confidence, and growth in these two
components of GDP will drop
considerably.
The coming year will be a difficult one for the UAE. We have
revised down our growth forecasts once
again on the back of a worsening
export sector, weakness in the construction market, job losses and
increased investor caution. It is possible that the country could fall into
recession - defined as two
consecutive quarters of negative growth -
during the year, but this will be difficult to assess given the
lack of
quarterly data provided by the central bank. Overall, we believe that real GDP
will grow by 1.0%
in 2009, rising to a healthier 3.4% in 2010. Much of the
worst news will come out of Dubai; this is the
Emirate that is most
closely integrated with the global economy and the one that has experienced
the most
rapid growth in recent years. Abu Dhabi has greater natural
wealth thanks to its oil reserves, but economic
weakness in Dubai will
undoubtedly have some feed-through effects across all Emirates.
Once
again, the property and construction market, particularly in Dubai, is
integral to our view. Bad news
has been emanating from the sector for
several months, and we have previously highlighted the likelihood
of price
falls in the residential sector in particular, due to oversupply and weakening
investor confidence.
What has changed during the last quarter is the
stance of property developers. As recently as October or
even November
2008, most major developers were insisting that all their construction plans
remained on
track, that financing was not a problem and that they remained
confident of finding buyers for all new
projects.
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 local firms that are
active in the region, particularly in Kuwait,
Oman, Saudi Arabia and the
UAE.
Over the course of 2008, actual total premiums in UAE rose by 32% to
AED18,386mn. Non-life
premiums rose by 32% to AED15,444mn, while life
premiums rose by 32% to AED2,943mn.
Between now and the end of the
forecast period, we expect that annual non-life premiums will rise by
AED11,986mn, while annual life premiums should rise by AED4,329mn.
Growth
in non-life premiums should be driven by the general growth of nominal GDP
plus a rise in nonlife
penetration from the current level of 1.57% to
2.00%.
Growth in life premiums should be driven by the change in the
overall population and a rise in life density
from US$114.43 to US$250.00
per capita.
BMI' s Insurance Business Environment Rating for the UAE is
56.9.
| 
View Cart
