This article presents S&P Global Ratings' insurance industry and country risk assessments (IICRAs) for 102 insurance sectors covering 52 countries and four global sectors (see tables 2-6). We review these IICRAs by applying our criteria "Insurers Rating Methodology," published July 1, 2019. In addition, the article lists the key risks of each sector, which we classify in 9 different categories. In this publication, we have updated the description of some of these categories, where we have aligned them to better reflect the evolving risks to which insurers are exposed.

Table 1

Latest Actions

Since our last publication ("Insurance Industry And Country Risk Assessment Update: December 2021," published Dec. 6, 2021), we have:

• Revised our IICRA on Russia's property and casualty (P/C) insurance sector to very high risk, from moderately high risk. The very high country risk reflects our view of increased geopolitical and economic risks in Russia. In turn, our high industry risk reflects the impact of the volatile and uncertain macroeconomic environment and its subsequent negative effect on the sector's profitability. In our view, Russian insurers will face severe profitability constraints arising from both escalating claims costs and underwriting deficits, combined with investment valuation losses. The impact of sanctions, both recent and potentially additional, could further intensify volatility in the P/C market.

• Revised our industry risk assessment on Italy's P/C sector to low from moderately low, thanks to the sector's strong profitability prospects. This reflects 10% return on equity and combined ratios that have consistently exceeded forecasts and remained below 95% in recent years. Over the next two years, we expect a moderate deterioration in combined ratios on the back of a rebound in claims frequency post-COVID-19, but these will likely remain lower than pre-pandemic levels, allowing the sector to absorb the potential impact of inflation on claims costs.

• Revised our industry risk assessment on the UAE P/C sector to low from moderately low. The change in industry risk is mainly due to the market's stronger operating performance in recent years when compared with peers. We expect the market will remain highly profitable in 2022-2023, although perhaps at a slightly lower level due to high competition in the motor line of business.

• Discontinued our IICRA on the Jordan P/C sector.

In this report, we also publish our assessment of the country and industry risks to which insurers are exposed.

About Insurance Industry And Country Risk Assessments

An insurer's business risk profile forms one of the key components of our rating analysis. It measures the risk inherent in the insurer's operations, which affects the sustainable return that may be derived from those operations. The business risk profile is based on our analysis of an insurer's competitive position, modified to incorporate the industry and country risks to which a specific insurer is exposed.

Each IICRA addresses the risks typically faced by all the insurers that operate in a specific industry and country. To determine the IICRA, we apply our "Country Risk Assessment Methodology And Assumptions," published Nov. 19, 2013, to assess country risk, and then modify it according to our view of industry risk. We assess country risk on a scale from strongest (very low risk) to weakest (very high risk).

We assess industry risk on a four-point scale from low to high. Our analysis of industry risk addresses the level, volatility, and sustainability of profitability in a given industry sector. The primary factor in our industry risk analysis is an assessment of prospective profitability, supplemented by a holistic analysis of factors that, in combination, are likely to either support or threaten industry profitability prospects, such as barriers to entry, market growth prospects, product risk, and the institutional framework.

The impact of IICRAs on our ratings varies according to the degree of risk. The higher the risk, the greater the adverse impact on the business risk profile. The risks are categorized as 1-very low, 2-low, 3-intermediate, 4-moderately high, 5-high, or 6-very high.

Within each country, if applicable, we separately assess the life and P/C sectors. Where it has a distinct legal and regulatory framework, we also assess the health sector separately. In addition, in certain countries, we assess the insurance industry and country risk for the bond, mortgage, and title insurance sectors.

Some sectors are more naturally global, because insurers in those sectors typically write business in multiple countries around the world. Consequently, we assess IICRAs globally for life reinsurance, P/C reinsurance, trade credit insurance, and marine protection and indemnity insurance.

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Related Criteria

• Insurers Rating Methodology, July 1, 2019
• Country Risk Assessment Methodology And Assumptions, Nov. 19, 2013

Related Research

• Country Risk Assessments Update: April 2022, April 1, 2022
• Russian Property/Casualty Insurance Industry And Country Risk Assessment Revised To Very High Risk, March 10, 2022