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Jul 2022

Saudi Arabia: Local reinsurer to increase capital to $356m through IPO

Source: Middle East Insurance Review | May 2022

The board of Saudi Cooperative Reinsurance (Saudi Re) has recommended an increase in capital by SAR445.5m ($118.7m).
 
The announcement, posted on the Saudi Exchange (Tadawul), said the move will increase the capital of the reinsurer to SAR1.37bn from SAR891m. The number of shares will increase to 133.65m from 89.1m. The capital increase is pending approval of the Saudi Central Bank, the Capital Market Authority, and other regulatory authorities, in addition to its extraordinary general meeting.
 
The company aims from this move to strengthen its capital base and support its future expansion activities.
 
The planned capital raise will initially result in a slightly lower return on capital, but it will also provide additional capacity to support the growth of the insurance market in Saudi Arabia and further international expansion opportunities, Moody’s said in a report. The company is active in around 40 markets, including the Middle East, Asia and Africa. It is one of the region’s largest reinsurers, with premiums of SAR1.1bn in 2021 and premium growth rates of 19.3% and approximately 18% in 2021 and 2020, respectively.
 
Saudi Re’s gross underwriting leverage metric has recently deteriorated, but its capital adequacy remains strong, providing the company with “good flexibility to withstand potential stress scenarios”, Moody’s said.
 
The Saudi reinsurer has developed its strategy towards 2026, which focuses on solidifying its local presence in Saudi as well as diversifying in international markets. “In line with our long-term strategy towards 2026, we have set out with a clear ambition at the onset of 2021 to evolve and diversify as a company that can reliably serve the risk and growing reinsurance needs of the kingdom, aiming to become among the top 50 global reinsurers,” said Saudi Re managing director Fahed Al Hesni. M 
 

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