Tuesday, Jan 06, 2009
DUBAI (Zawya Dow Jones)--Al Alamiya for Commerce and Services, part of the Royal and Sun Alliance Insurance Group (RSA.LN), or RSA, is preparing to launch an initial public offering after it was granted a royal decree to operate as a licensed insurance in Saudi Arabia, the firm said Tuesday.
Al Alamiya is preparing to offer shares to the public after it receives approval from the kingdom's regulator, the Capital Market Authority, according to a spokesperson. Licensed insurance companies are forced, by law, to list on the Saudi exchange.
Al Alamiya, a joint venture between RSA, Riyad Bank, and several wealthy Saudi investors, has been operating in the kingdom since 1976. The company has acted as an agent and underwriter for RSA's interests in the country without a license, a set up that other international insurance groups have used.
American International Group Inc. (AIG) has some interests in Saudi Arabia but does not have a license. French insurance giant AXA S.A. (12062.FR) in the past underwrote policies in the kingdom through a distributor until it received a license last July.
The insurance industry considers the Middle East and other countries with large Muslim populations to be underinsured. This is due to a belief held by many Islamic scholars that insurance violates religious codes.
Saudi Arabia, the Middle East's biggest economy and holder of the world's largest oil reserves, has long been targeted by Western insurance companies, despite the kingdom only granting few licenses and choosing to develop its own sector.
As the kingdom is gradually opening its doors to foreign players, insurance companies are rushing in for the prize as they seek to capture the growth potential of an underinsured market and the appetite for takaful, insurance products that comply with Islamic laws.
Takaful premiums are expected to reach $7.5 billion by 2015, according to Moody's, the international ratings agency.
-Mohammed Aly Sergie, Dow Jones Newswires, +96655-6221-334, mohammed.sergie@dowjones.com
Copyright (c) 2009 Dow Jones & Company, Inc.
(END) Dow Jones Newswires
06-01-09 1408GMT
