Abstract
The global growth outlook has worsened considerably over the last few months,
and our previous
optimism, not only towards Kuwait but also to most other
emerging and developed markets, has
dampened. Our core scenario is for
global growth to slow from 2.9% in 2008 to 2.0% in 2009, before
making a
tentative recovery to 3.5% in 2010, and then accelerating to average 4.2% for
the remainder of
the forecast period. We have revised down our average
OPEC Basket price forecast to US$71.50/US$ for
2009 (albeit expecting a
bounce to US$81.50/bbl from 2010-2013).
In spite of this, we think that
existing momentum and the government' s willingness to buy its way out of
this crisis will keep growth on an even keel, and although we have adjusted
our forecasts since our last
Business Forecast Report, we still see a
fairly robust rate. Many governments worldwide are looking
towards fiscal
stimulus to boost economic prospects, and Kuwait is better placed than most to
do this,
with estimated sovereign wealth fund assets of US$200bn and a
projected budget surplus of US$19.3bn
in 2007/08 (final figures have not
yet been released). We actually think the worst of the effects will be
felt
over the longer term, as Kuwait makes the transition from US$150/bbl
oil to US$80/bbl oil (or worse),
and existing resources are depleted.
Against this backdrop, we see growth slowing from a projected 7.2%
in
2008, to a still impressive 5.4% in 2009, 5.3% in 2010 and then to an average
annual 3.7% thereafter.
Government spending, whether via the official
budget or the sovereign wealth fund, will be the major
driver of growth
over 2009: we are forecasting an 8% real rise in this component of GDP.
Since the last quarter, we have made two major changes to the data in this
report. First, we have – to the
greatest extent possible –
incorporated hard figures that have been made available by the regulator(s)
and
trade association(s) in each country. In some cases, therefore, we
have begun to include numbers that
pertain to the development of the
insurance sector through the early stages of the global financial crisis.
Second, we have extended our forecasts out to 2013. In all cases, we have
reviewed the key growth
drivers – non-life penetration and life
density – that we had incorporated in our forecasts.
The global
financial crisis is likely to affect the various segments of the global
insurance industry in
different ways. In many countries, especially in
Europe, the coming recession points to softness in the nonlife
segment. In
many cases, numbers of policies may fall and there should be downwards
pressure on
premiums. By contrast, the main problem for the life segment
in almost every country is the extreme
volatility of financial markets.
Over the longer term however, the fortunes of life insurance will likely
recover thanks to the secular growth of organised savings in most countries.
China – where the larger
insurance companies continue to achieve
double-digit growth in premium income – is a good example of
this.
Some particular niches should also do well in the current environment, such as
legal liability insurance.
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.
BMI' s Insurance Business
Environment Rating is 45.3
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