Best’s Special Report: Lebanese Insurers Continue to Demonstrate Resilience Despite Challenging Operating Environment

LONDON–(BUSINESS WIRE)–Insurance companies in Lebanon continue to operate in a challenging
environment, with Lebanon’s history characterised by social and
political divides, and the country presenting high levels of economic,
political and financial systems risks, according to a new report by A.M.
. Furthermore, market fragmentation has led to significant
competitive pressures – particularly on the motor line of business,
which has suffered high combined ratios in the past five years.
Pressures on profitability have been accentuated further by competitive
distortions, with mutual insurers (caisses mutuelles) that benefit from
not being supervised by the insurance market regulator, the Insurance
Control Commission (ICC), proposing aggressive rates, especially on
group medical insurance.

The Best’s Special Report, “Lebanese Insurers Continue To
Demonstrate Resilience, Despite Challenging Operating Environment,”
states that against the background of difficult wider economic and
political conditions, the Lebanese insurance industry has demonstrated
resilience and has continued to grow, albeit at a declining rate.
Despite being a fragmented and overcrowded market with significant
competition and soft rates in personal lines, it has remained profitable.

Alex Rafferty, senior financial analyst, said: “The companies A.M. Best
rates in Lebanon have generally maintained solid levels of
capitalisation on a risk-adjusted basis. Likewise, the market as a whole
also exhibits an average solvency coverage ratio comfortably in excess
of local capital requirements. Furthermore, balance sheet strength is
aided by prudent investment allocation, with Lebanese insurers favouring
highly liquid investment portfolios, weighted toward cash and short-term

The report adds that regulatory solvency is high on the agenda of
industry bodies, with the ICC advancing a project to introduce a
risk-based capital framework that A.M. Best views positively, as more
stringent regulatory solvency requirements would likely lead to
increased financial strength of the industry.

Ghislain Le Cam, director, analytics, said: “A.M. Best expects that
requirements for strengthened governance frameworks would accompany
solvency reform, in line with what has been observed with the
implementation of the Solvency II regime in Europe. These would
complement more vigorous capital regulation with enhanced internal
standards and capabilities within insurance companies, notably as
regards to capital and risk management.”

To access a complimentary copy of this report, please visit

A.M. Best is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit

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For A.M. Best
Alex Rafferty, ACA
Financial Analyst

+44 20 7397 0285
Le Cam, CFA, FRM

Director, Analytics
+44 20 7397

Director, Research & Communications –Europe, Middle
East & Africa

+44 20 7397 0322

Director, Market Development & Communications
20 7397 0280