But for the underdevelopment of the life segment, Saudi Arabia would be the most attractive prospect for

international insurance companies that are looking to operate in the Gulf Cooperation Council (GCC)

countries. Virtually all other trends are favourable and the market has been opened up to foreign

competition. New laws are promoting the development of health insurance. Saudi Arabia’s economy has

withstood the downturn in energy prices through 2009 well.

Saudi Arabia’s insurance sector differs from others in the Middle East in that it includes at least one

indigenous insurer – Tawuniya – that would rank as a large insurance company in most countries.

Figures released by Tawuniya to Tadawul, the local stock exchange on which it is listed, indicate that its

premiums nearly doubled over the course of 2009. By contrast, the next two largest players – Medgulf (a
regional insurance company substantially owned by Saudi Arabian interests) and Bupa Arabia (the

partly-owned subsidiary of UK health insurance giant Bupa) – lost ground.

In this report, we provide a breakdown of the market shares of the various market participants. We also

provide a breakdown of the insurance sector by line, from the point of view of the regulator or trade

association. The Saudi Arabian market is dominated by health products, which is double the value of the

next most popular insurance, motor. They account for around 40% and 20% of the insurance products

marketplace, respectively.

We have been able to ensure that the report includes actual data for 2008. We have generally been able to

use data that has been published over the course of 2009 to adjust our forecasts for the year as a whole.

We forecast total premiums in 2009 of SAR17,480mn. This is made up of non-life premiums of

SAR16,784mn and life premiums of SAR696mn. In 2014 the corresponding figures are forecast at

SAR44,618, SAR43,295mn and SAR1,323mn. In terms of the key drivers that underpin our forecasts, we

forecast that non-life penetration will rise from 1.06% in 2009 to 1.80% in 2014, and life density from

US$8 to US$13. BMI’s Insurance Business Environment Rating for Saudi Arabia is 53.2 out of 100.

Islamic Finance

The problems of Dubai World and its affiliates in the UAE in late 2009 have overshadowed the longterm

strengths of Islamic finance. The absolute size of the capital pools in Saudi Arabia mean that the

country has very strong potential as a market for the issuance and distribution of sukuks. Some estimates

suggest that contributions to takaful operators account for about one-fifth of the Saudi Arabian insurance

market.

Regional Consolidation

There is, and has been for some time, limited cross border investment by insurance companies based in

the Middle East. Medgulf and ARIG are examples of (re)insurers based within the region that operate

very effectively across national borders within the GCC states (and slightly further afield). In Saudi

Arabia (and all other Arab countries in the region), the vast majority of insurance companies are small by

anything other than local standards and lack economies of scale. There is scope for consolidation.

Health Insurance

This line has emerged as a major – and growing – line in the non-life segment and should remain so.