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The Middle East and North Africa (MENA) reinsurance market continues to present solid top-line growth opportunities and attract steady inflows of international capital, even as geopolitical tensions and economic uncertainties intensify across the region, a new AM Best report states.
According to the Best’s Market Segment Report, “MENA Reinsurers are Focused on Profitable Growth Opportunities Despite Heightened Geopolitical and Economic Uncertainties”, the growth potential for reinsurers is supported by adequate reinsurance pricing and emerging business opportunities, particularly in specialised risks.
Fleur Ngassa, financial analyst at AM Best and one of the report’s authors, said: “Despite uncertain times, some growth opportunities have emerged for reinsurers in the region. Addressing the protection gap remains a key priority in MENA markets, which has led to the development of specialised product offerings, such as cyber insurance, parametric insurance and retakaful products.”
Geopolitical risks have escalated significantly since early 2025, driven by intensifying regional security tensions and the outbreak of the US/Israel conflict with Iran, increasing uncertainty in the risk assessments of insurers and reinsurers.
AM Best highlights that if de-escalation efforts fail or the disruption of the Strait of Hormuz blockade persists, the economic impact – via oil prices, supply chains, and inflation – will significantly affect global and regional insurers.
While key regional markets like Egypt, Tunisia, and TĂĽrkiye benefited during 2025 from cooling inflation, narrowed fiscal deficits, and sovereign debt upgrades, these gains face mounting pressure.
The International Monetary Fund (IMF) now projects regional economic growth to slow to 1.1% in 2026, accompanied by a rebound in inflation to 13.5%, creating acute headwinds for net energy-importing economies.
Despite these macro-level headwinds, direct losses for MENA reinsurers are currently expected to be limited by war exclusions and narrow policy triggers, according to AM Best.
Reinsurers are managing volatility through asset and underwriting diversification, liquidity buffers, and ongoing reviews of high-risk asset appetites.
The region remains attractive, with new capacity entering through start-ups like Riyadh Re and Reinsurance Intelligence Quotient. Geopolitical tensions are also driving higher demand for specialised insurance products, creating further opportunities in growing primary markets.
Although abundant market capacity is causing softening in some lines, pricing remains adequate due to claims inflation and recent increases in large man-made and weather losses. This environment, alongside strong underwriting discipline and refined risk appetites, continues to support market participants, AM Best stated.
Despite the volatility, select growth avenues are surfacing across the domestic market. Demand for war, political violence, and terrorism coverage has surged, though the bottom-line benefit for local reinsurers is tempered because these exposures are largely ceded to international players.
Concurrently, efforts to narrow the region’s protection gap through specialised solutions – such as cyber, parametric covers, and retakaful – are gaining traction, presenting sustainable, long-term drivers for regional reinsurance capacity as market awareness expands.
At the same time, the MENA region is continuing to attract international interest, supported by its growth prospects and open market structure, resulting in a steady inflow of new capital.
The shape of the reinsurance market is highly varied, with capacity available from global reinsurers, MENA reinsurers, direct domestic carriers (through inward facultative business) and reinsurers based across Africa and Asia.
AM Best notes that domestic reinsurers have greater growth prospects through mandatory cessions, such as Saudi Arabia’s requirement since January 1, 2025, for insurers to offer them at least 30% of cessions.
While mandatory cessions help local reinsurers capture greater market share and can prove more profitable – as seen in North Africa – the specific impact in Saudi Arabia is still unqualified, according to the report.
Meanwhile, international reinsurers remain attracted to MENA markets, but “Their underwriting appetite has become more selective in response to heightened geopolitical tensions.”
As a result, securing optimal terms, pricing, and coverage now demands deeper market engagement compared to past practices.
Taking all these into account, AM Best highlighted that its credit ratings for reinsurers domiciled in the region – which range between Long-Term Issuer Credit Ratings (ICR) of “bbb-” through to “a” – can vary, in part due to the economic, political, and financial system risks that reinsurers are exposed to.
Over the past year, two companies’ ICRs have been upgraded, and the outlooks of two others have improved from Stable to Positive. The drivers of these actions vary by company, with most reflecting improvements in balance sheet strength, while others reflect improved operating performance trends.
Overall, AM Best expects companies’ rating fundamentals to remain resilient against the backdrop of challenging economic and geopolitical conditions.
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