Abstract
The economic outlook has worsened since our last Business Forecast Report,
with our latest oil price and
production figures having been revised down,
and the global climate continuing to deteriorate. Interbank
lending
remains very tight, and private sector projects continue to be cancelled.
However, we are
relatively positive on Saudi Arabia compared with some of
its neighbours: it will suffer less from the
population shrinkage we
expect for the UAE and Qatar, and strong domestic need for housing will
keep
its real estate sector from experiencing the same degree of
correction. We are forecasting real GDP
growth of 2.1% this year, and 2.8%
in 2010, followed by a recovery to 3.5% in 2011-2012 and 4.2% in
2013.
Breaking down our GDP forecast by expenditure, the most positive areas in 2009
will be government
spending (which we see rising by a real 5.0%) and gross
fixed capital formation (positive 2.0%
expansion). However, these will
suffer from the tighter lending conditions that have been plaguing the
interbank market. Although rates are down from the spike back in Q308, on the
back of central bank
easing and other liquidity measures, risk aversion is
still very much in play, and private sector borrowers
say that conditions
remain very challenging.
That said, the government is determined to keep
the economy going, and, like many other governments
across the globe, is
prepared to pay for it. Riyadh has said it plans to spend SAR450bn (US$120bn)
on
major projects such as roads, railways and new cities in the next five
years. In real terms, therefore, the
economy is set to grow, even if it
feels like a recession for consumers and workers.
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. For almost all the
countries whose reports we are updating, we are
also able to include
actual data for calendar year 2007. This was not the case for our Q208
reports.
We estimate that, over the course of 2008, total premiums in
Saudi Arabia rose by 24% to SAR10,557mn.
Non-life premiums rose by 23% to
SAR10,155mn while life premiums rose by 50% to SAR402mn.
Between now and
the end of the forecast period, we estimate that annual non-life premiums will
grow by
SAR9,004mn, while annual life premiums should grow by
SAR681mn.
Growth in non-life premiums should be driven by the general
growth of nominal GDP plus a rise in nonlife
penetration from the current
estimated level of 0.56%, to 1.00%.
Growth in life premiums should be
driven by the change in the overall population and a rise in life density
from a current estimated US$3.59 to US$10.00 per capita.
BMI' s Insurance
Business Environment Rating for Saudi Arabia is 52.1.
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