S&P Global Ratings, the international credit rating agency, has stated that insurers across the Gulf Cooperation Council (GCC) are likely to maintain stable credit conditions despite the ongoing conflict in the Middle East.
The agency underscores that its assessment is shaped by considerable uncertainty regarding how long the conflict will last and how far its effects may spread across economies and financial markets.
S&P Global Ratings indicates that its base-case scenario assumes a relatively contained period of intense military activity, lasting approximately two to four weeks.
However, the agency stresses that secondary effects, including intermittent security incidents and broader regional disruption, could extend beyond this timeframe. Given these uncertainties, S&P Global Ratings notes that its forecasts remain subject to revision as new developments emerge.
In its analysis, S&P Global Ratings emphasises that most rated GCC insurers have accumulated strong capital positions in recent years, which should allow them to absorb potential shocks stemming from market volatility or conflict-related claims.
According to S&P Global Ratings, direct exposure to war-related losses is generally limited, as standard insurance contracts exclude such risks, while specialist policies are typically transferred to global reinsurers. This structure, S&P Global Ratings explains, significantly reduces the net risk retained by regional insurers.
S&P Global Ratings highlights that any claims arising from the conflict are most likely to affect specific segments such as marine, aviation, energy and cyber insurance. Even within these lines, S&P Global Ratings considers the financial impact on GCC insurers to be contained due to extensive reinsurance protections.
The agency also draws attention to the potential consequences of prolonged disruption to key trade routes. S&P Global Ratings notes that an extended closure of the Strait of Hormuz could lead to supply chain constraints and higher import costs, particularly for automotive parts.
This could place upward pressure on claims in motor insurance, a segment that represents a significant share of the region’s premium income. Nonetheless, S&P Global Ratings adds that weaker economic activity and reduced travel may lower traffic volumes, potentially offsetting any increase in claims frequency.
From an earnings perspective, S&P Global Ratings expects underwriting performance in 2026 to remain broadly consistent with the previous year. However, S&P Global Ratings points out that profitability may differ across markets, with Saudi Arabia likely to continue underperforming regional peers due to its higher reliance on lower-margin medical insurance business, despite some pricing adjustments in motor lines.
S&P Global Ratings further reports that revenue growth across the GCC insurance sector is set to moderate in 2026 after a period of strong expansion. The agency forecasts that premium growth in Saudi Arabia and the United Arab Emirates could reach up to around 5%, while other markets may record slower increases.
S&P Global Ratings links this outlook closely to the duration of the conflict, noting that a quicker resolution would likely support a recovery in consumer confidence and economic activity.
At the same time, S&P Global Ratings observes that demand for war-risk insurance could increase, particularly in markets such as the UAE, where broader coverage frameworks are under consideration. According to S&P Global Ratings, this may provide selective support to insurers active in this niche segment, partially offsetting weaker demand elsewhere.
In terms of credit quality, S&P Global Ratings states that the majority of rated GCC insurers continue to carry stable outlooks, reflecting strong earnings and robust capitalisation. The agency notes that a large proportion of insurers demonstrated the highest levels of capital adequacy in its 2025 assessments, reinforcing the sector’s resilience.
However, S&P Global Ratings cautions that financial market volatility remains a key vulnerability. The agency warns that significant declines in property or equity markets could weaken capital positions, particularly for insurers with higher exposure to these asset classes. S&P Global Ratings also highlights that tighter financing conditions could make it more challenging for weaker firms to rebuild capital buffers if needed.
Overall, S&P Global Ratings maintains that, unless the conflict intensifies significantly or persists for an extended period, GCC insurers are well placed to navigate the current environment, with credit conditions expected to remain stable in the near to medium term.
