Saudi Arabia: Insurance market sees 59% drop in profits in 2017 on flat topline growth
Source: Middle East Insurance Review | May 2018
The Saudi insurance sector’s aggregate profits before zakat plunged by 58.7% to SAR1bn ($267m) in 2017, while GWP remained flat at SAR35.4bn, according to corporate disclosures on Tadawul, the Kingdom’s stock exchange.
The industry’s profits have been largely skewed by the big losses registered by three operators, namely, Mediterranean and Gulf Cooperative Insurance and Reinsurance (MedGulf) which registered losses of SAR388.0m, Company for Cooperative Insurance (Tawuniya) SAR146.5m, and Saudi Indian Company for Cooperative Insurance (Wafa Insurance), SAR32.7m. In contrast, these three insurers had reported net profit in 2016.
Overall, eight out of the 32 insurers in Saudi Arabia ended 2017 in the red compared to five in the preceding year, including MedGulf and Tawuniya who are among the top five players in terms of premium income. At the same time, profits of 12 insurers declined in 2017 while the net results of four other providers continued to be in the red.
As for the top line, the GWP of 16 insurers fell, of which Malath Cooperative Insurance and Reinsurance (Malath) saw the sharpest decline of 66.5%. The increase or decrease in the top line of individual insurers is not necessarily a good indicator of growth in the companies’ market shares in 2017 especially because several insurers had been suspended from writing motor or medical cover for various lengths of time, that could be as long as four months for some.
The aggregate results do not include the country’s sole local reinsurer, Saudi Re whose profits soared by more than 110% to SAR38.9m in 2017 while premiums fell by 4.4% to SAR942.0m. M