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Saudi Arabia: BMG to manage ACIG's 40pc shares

JEDDAH: Allied Cooperative Insurance Group (ACIG) has mandated BMG Financial Advisors to act as arranger and lead manager to offer 40 per cent of its shares to the public.

The announcement was made on Friday by Dr. Omar Zuhair Hafiz, president and CEO of ACIG, which has been licensed along with 12 other insurance companies to operate in the Kingdom according to the decision of the Council of Ministers taken at its session held on Monday.

The 13 companies will have a total capital of SR2.62 billion and they will float shares worth SR936.44 million for public subscription. The capital of the companies ranges between SR100 million and SR800 million One company has agreed to float 47.49 per cent of its shares; nine will float 40 per cent and the remainder between 25 and 31 per cent of shares.

Aside from ACIG, the other licensed insurance companies are Gulf Union Cooperative Insurance , Arabian Shield Insurance , Sanad for Cooperative Insurance , Saudi United Cooperative Insurance (Amity), Assurance Saudi Fransi, Al-Ahlia Insurance, Mediterranean & Gulf Insurance & Reinsurance (MedGulf), Malath Insurance, Saudi Indian Insurance , Saudi IAIC for Insurance, SABB Takaful and Saudi Arabian Insurance.

Eighteen other insurance companies, some of whose licences are being processed at the Ministry of Commerce and Industry, are still awaiting Cabinet endorsement.

"The grant of licence to the 13 companies was long awaited. Surely, the Saudi capital market will react positively on the inclusion of these 13 insurance companies into the system," said Basil Al-Ghalayini, CEO of BMG .

"ACIG is the only insurance company where the Islamic Development Bank is a key shareholder. This company will have a competitive edge in the insurance market," he added.

Al Ghalayini put stress on the need to have several licensed insurance companies in the Kingdom to increase the competition level that will in turn improve customer service, especially health insurance, which Dr. Hafiz expects to reach SR10 billion in the next five years.

ACIG is considered one of the oldest international insurance companies in the Kingdom, where its history goes back to more than 25 years of service in Saudi Arabia. Moreover, it offers several products within health and general insurance that covers a wide range of corporate and individual clients in the Saudi market.

BMG , which organised the first insurance forum in Saudi Arabia in cooperation with the Saudi Arabian Monetary Agency (SAMA) in 2004, has received the first licence from the Capital Market Authority (CMA) for advising and arranging initial public offerings (IPOs). It has a well-established and successful track record in the insurance sector. The insurance market in Saudi Arabia is estimated at SR8 billion. According to the latest economic report by the National Commercial Bank (NCB) , the development of health insurance will result in a further SR30b being invested in the Saudi health sector. The report also predicted that the Kingdom's insurance market will jump from SR8 billion to SR18 billion within the next five years.

The medical insurance premiums are estimated to grow from about SR1.1billion in 2004 to SR6.3 billion in 2008 a CAGR (compounded annual growth rate) of 54.8 per cent.

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© Khaleej Times 2006