Riyadh: Malath Cooperative Insurance and Reinsurance Company which was licensed to practice insurance business in the Saudi market in accordance to the cooperative insurance regulations issued by SAMA, is now prepared to offer 48.47 percent of its capital for initial public offering (IPO).
The company has already obtained an approval from the Capital Market Authority (CMA) and SAMA for offering part of its capital for subscription starting from Moharram 15, 1427, corresponding to Feb. 3 in cooperation with all banks operating in Saudi Arabia, which will start receiving subscription applications through their branches Kingdom wide.
Earlier, Malath has already appointed HSBC Saudi Arabia as the IPO manager and SABB as the underwriter for the offering of 48.47 percent of its capital. Preparations for receiving subscriptions applications through banks in the Kingdom have been completed.
Mubarak Al-Khafra, Chairman of the Board of Directors, announced that the company will offer 48.47 percent of the total capital of SR300 million for public offering at a nominal value of SR10 per share. This is the largest percentage offering among the new insurance companies that have been announced recently.
Al-Khafra explained that the selection of HSBC Saudi Arabia was based upon the vast experience they have from managing several successful IPOs in the Saudi stock market, in addition to the experiences they enjoy in providing financial solution to the Saudi market.
Al-Khafra added, "We expect that the subscription to Malath offering will be met with high demand from citizens, particularly that the company enjoys several advantages that qualify it to compete in the insurance market in the Kingdom."
According to him with the introduction of the compulsory cooperative health insurance for expatriates, in addition to the decision of the Ministerial Council to adopt car insurance system instead of the driver's license insurance, the Saudi market will witness major competition in this promising industry in the upcoming period, especially in the medical and motor insurance sectors.
He pointed out that the compulsory cooperative health insurance for expatriates and the car insurance will account for approximately 70 percent of the total subscriptions in the market.
Al-Khafra said that the one of the most significant advantages of the new regulations of the insurance sector is the transformation of the insurance companies into public joint stock companies.
Studies reveal that more than 10,000 employment opportunities for citizens will emerge through expected increasing annual premium from around SR4.5 billion currently to SR15 to 20 billion during the next five years.
This will raise annual individual spending on insurance from around SR150 to around SR750. In addition, rates of retaines premium in the Kingdom will also increase after establishing local re-insurance companies, as well as creating giant investment channels locally to benefit from the insurance funds.
"Such developments will enhance the position of insurance industry in Saudi Arabia and enable it to face the challenges of globalization and foreign competition, and will also open door wide for foreign companies," Al-Khafra said.
© The Saudi Gazette 2007
