AM Best, a credit rating agency and provider of insurance market intelligence, reports that reinsurers operating in the Middle East and North Africa (MENA) are facing a complex and demanding environment.
Despite these pressures, AM Best emphasises that the region continues to attract significant reinsurance capital, and new capacity continues to enter the market, offering ample opportunities for insurers that can manage the risks.
AM Best notes that pricing across MENA remains firm, reflecting global market responses to increased claims inflation and the growing frequency of major man-made and weather-related losses.
The agency highlights that disciplined underwriting practices and carefully defined risk appetites have allowed many reinsurers in the region to benefit from these market conditions.
However, AM Best also observes that local economic conditions and geopolitical dynamics are playing an increasingly prominent role in shaping business strategies and operational resilience.
According to AM Best, geopolitical risks intensified in early 2025, prompting insurers and reinsurers to reassess country risk exposures.
While the direct effects on the insurance industry are expected to be limited, largely due to war exclusions and narrowly defined policy triggers, AM Best notes that reinsurers are proactively managing potential volatility through diversified asset and underwriting portfolios, maintaining sufficient liquidity, and continuously reviewing their tolerance for high-risk exposures.
AM Best highlights that natural catastrophe losses have had a profound impact on market practices. Events such as the February 2023 earthquakes in Türkiye and Syria, as well as the April 2024 pluvial flood in the UAE, have driven a reassessment of regional catastrophe risk, particularly in areas where exposure was previously underestimated. AM Best reports that these events have placed upward pressure on reinsurance pricing, particularly for property, engineering, and energy lines heavily ceded to the reinsurance market.
In response, regional reinsurers have tightened terms, increased attachment points, limited profit commissions and event coverage, and raised retentions for higher return periods. AM Best states that these measures, while slightly moderated in 2025, reflect a deliberate effort to protect underwriting margins amid growing catastrophe risk and inflationary pressures.
The agency further observes that regional reinsurers are investing in internal catastrophe modelling and leveraging third-party tools to strengthen risk selection and pricing adequacy.
Nevertheless, AM Best cautions that the ability of MENA-based reinsurers to compete with global peers remains constrained by their smaller scale, limited access to proprietary modelling capabilities, and narrower geographic diversification. Government-backed catastrophe schemes in the region also provide opportunities for local reinsurers.
AM Best notes that Algeria, Morocco, and Türkiye have implemented mandatory schemes that require local cessions, boosting premium volumes and stabilising underwriting results.
Following the successful activation of these schemes in Türkiye and Morocco after severe events, AM Best reports that discussions about expanding similar frameworks to other countries are gaining momentum.
AM Best emphasises that economic conditions across MENA vary considerably, affecting reinsurer performance and financial strength. Countries such as Lebanon, Tunisia, and Egypt face high public debt, inflationary pressures, and sovereign downgrades, while Türkiye’s macroeconomic stabilisation remains fragile.
Reinsurers with concentrated operations or asset exposure in these markets are therefore more susceptible to financial and operational pressure.
Despite these challenges, AM Best concludes that reinsurance capacity in the MENA region remains both dynamic and abundant. International interest may fluctuate in response to regional performance and broader global trends, but the agency notes that the region’s liberal regulatory environment continues to support strong competition.
AM Best reports that the ongoing influx of capital enables reinsurers to maintain resilience, capitalise on opportunities, and manage the evolving risks posed by natural catastrophes, inflation, and regional economic volatility.
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