• MENA presents great opportunities for takaful operators
• Bermuda reinsures prove resistant, despite 2017 challenges
• ICA declares catastrophe after storm in Hobart
• Compre appoints new COO

However, the report has found that these opportunities remain unrealized, with many takaful companies struggling to establish strong profiles.

The main issue faced by takaful providers is a lack of differentiation, meaning they are subject to price competition with larger insurers that already have brand awareness and established distribution networks, the report said.

A.M. Best believes that support from sharia scholars in promoting Islamic financial products is essential for the growth of the takaful sector.

Salman Siddiqui, Associate Director, said: “Given the proportion of Muslims in the MENA region, A.M. Best considers the take-up of shari’a-compliant insurance to be disappointing, especially in contrast with the Malaysian experience, which exhibits higher takaful penetration – despite the country having a lower proportion of Muslims.”

However, the sector continues to deal will low investment yields, as well as pressure on profitability, Reinsurance News has reported.

The ratings agency also found that Bermuda reinsurers have successfully reduced their overall net catastrophe exposures in the last few years by transferring much of their business to the capital markets.

The Bermudian insurers and reinsurers discussed by Fitch include Arch, Axis, PartnerRe, RenaissanceRe, XL Catlin, and Validus.

Brian Schneider, Senior Director at Fitch, said: “Bermuda reinsurers typically maintain very strong capitalization while keeping leverage modest, which will serve them well as they continue to work through sizable catastrophe losses and shrinking profits.”

“The willingness of the capital markets to accept a lower price for catastrophe risk has helped to reduce the financial impact to Bermuda reinsurers.” Mr. Schneider said.