COVID-19-driven financial market volatility is expected to negatively impact solvency levels of Bahraini insurers this year, according to a new AM Best special report, adding to the challenges faced by the kingdom’s (re)insurance sector — the smallest among the Gulf Cooperation Council (GCC) countries.

The Best’s Special Report, “COVID-19 Adds to Challenges for Bahrain’s Fragmented Insurance Market,” notes the Bahraini (re)insurance market is very competitive, with a large number of companies vying for a limited amount of premium.

The report explains Bahraini insurers typically take more asset risk than their peers in mature markets. In particular, exposures to equities and real estate are generally higher among Bahraini insurers than among insurers in developed economies. As a result, their performance is heavily influenced by investment results and prone to volatility driven by financial market movements.

While the good solvency buffers of the large Bahraini insurance companies will allow them to