Fitch expects to accelerate the frequency of mergers in the Saudi insurance sector

The Fitch Credit Classification Agency expected that the frequency of mergers in the Saudi insurance sector will accelerate during the next two years, driven by the new organizational requirements related to capital and poor profitability of subscribing to insurance premiums in light of the intense competition for prices.


The agency said in a report that some small insurance companies may have difficulty in meeting these requirements or maintaining their profitability, and may merge with larger insurance companies or acquire them as a result.

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She added that the insurance companies are subject to an increased organizational audit since the insurance authority took responsibility for supervising the insurance sector from the Saudi Central Bank and the Health Insurance Council in 2023, indicating that the authority plans to implement a risk -based capital system in 2027 to help enhance the public budgets of insurance companies, and focuses on improving subscription discipline and enhancing the requirements of organizational reports.

She stated that these procedures will be positive credit for the sector in the long term, but it will increase the costs of organizational compliance with insurance companies, especially during implementation, which will increase the pressure on profitability in the short term, expected that smaller insurance companies will be morely size by increasing capital requirements and compliance costs due to the low savings of their size.


She pointed out that some large insurance companies, such as the cooperative and Buba Al -Arabiya, are dominating the Saudi market, as their market share combined 52% in 2024.