Saudi Arabia: 2 insurers sign MoU to study potential merger
Source: Middle East Insurance Review | Dec 2020
Saudi Enaya Cooperative Insurance has signed a non-binding MoU with Amana Cooperative Insurance to evaluate a potential merger between the two companies.
Both companies will conduct technical, financial, legal, and actuarial due diligence and engage in non-binding discussions on the terms and conditions of the potential merger, according to a report on the Mubasher news site quoting bourse filings.
Under the 12-month MoU, if the two parties agreed to proceed with the merger, it would be carried out by way of a share swap where Amana Cooperative will issue new shares to Saudi Enaya shareholders in exchange for all issued shares of Saudi Enaya.
The methodology used for valuation will be based on equity book value and the swap ratio between Amana Cooperative and Saudi Enaya shareholders shall be calculated using the respective adjusted equity book value per share as at a mutually agreed cut-off date.
The MoU follows an announcement in October that the two insurers were holding talks about a potential merger.
In Saudi Arabia, there is a push factor for smaller companies to merge as regulators have indicated that the minimum capital requirement for primary insurance companies will increase to SAR500m, from SAR100m at present, although no date has been set for this increase to be implemented. M