Call for consolidation in insurance sector

Central bank chief cites fragmented market with small firms competing against each other

Saudi Arabia’s insurance industry needs more consolidation and foreign input to help create solid companies capable of competing in the nation’s crowded market, the country’s central bank chief said. “There are some small firms I don’t believe are capable of surviving in the market in their current condition,” Ahmad Al Kholifey, governor of the Saudi Arabian Monetary Authority, told Bloomberg TV in an interview in Riyadh.

“We need more solid firms,” the governor said.

“We need more foreign participation.”

Saudi Arabia’s insurance market is largely fragmented with small firms competing against each other.

There are 33 insurance firms listed on the country’s stock exchange with a combined market value of $11.1 billion (Dh40.7 billion), according to data compiled by Bloomberg.

Insurance stocks rose the most in three months at the end of September after the kingdom’s government announced it was lifting a ban on women driving in the Arab world’s biggest economy.

The governor said two foreign firms would soon increase their stakes in Saudi insurance companies, “taking the majority.” He didn’t elaborate.

Banque Saudi Fransi said yesterday it sold an 18.5 per cent stake in Allianz Saudi Fransi Cooperative Insurance to Allianz Europe. In June, Al-Ahlia Insurance started non-binding talks with Gulf Union on a proposed merger, with an agreement expected to be reached by the first half of 2018.