LONDON — The Saudi insurance market appears to have finally turned the corner following a period of underwriting volatility, according to analysis by A.M. Best.
A review of preliminary disclosures by national insurers in Saudi Arabia shows a marked improvement in operating performance in 2016, with the market more than doubling its profits during the year. Market profit (before zakat) for 2016 was healthy at SR 2.5 billion ($671 million) – more than double 2015’s profits of SR 1.0 billion ($278 million).
In 2015, profit was primarily driven by the strong operating performance of market leaders, while the rest of the market generally produced weak earnings and many companies generated operating losses. In contrast, A.M. Best has noted a marked turnaround in 2016, with the vast majority of insurers generating positive operating results.
The findings are published in a new report by A.M. Best, titled, “Stability Returns to Saudi Insurers but Growth Prospects Remain Cloudy.” It notes that of the 33 primary insurers in the kingdom, 27 showed an operating profit in 2016, compared with 19 in 2015. Improvements in earnings have largely stemmed from the core insurance operations of companies rather than benefiting from gains from investment activities.
The report adds that despite the improvements in performance, there remains concern regarding overall market growth. In 2016, the Saudi insurance market grew at a modest 1%, primarily from rate increases in motor insurance, with gross premiums increasing by approximately 12%.
© The Saudi Gazette 2017
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