MetLife AIG ANB Cooperative Insurance yesterday announced that it had signed a non-binding memorandum of understanding with Walaa Cooperative Insurance to evaluate a potential merger between the two companies.
In a statement filed with Tadawul, Metlife AIG ANB said that 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.
They agreed that, in the event the proposed merger occurs, it will be implemented by way of an exchange of shares where, after the proposed merger is completed, Walaa will issue new shares to Metlife AIG ANB’s shareholders in exchange for all issued shares of the latter company.
Walaa reported profits exceeding SAR100m ($26.7m) on GWP of SAR1.1bn in 2018 and has been profitable for several years. In contrast, Metlife AIG ANB posted losses of SAR22m on GWP of SAR169m. The insurer showed accumulated losses of SAR26m at 31 December 2018.
There are more than 30 insurers operating in the Saudi market. The authorities are considering increasing minimum capital requirements for the insurance sector, a move which would force industry consolidation.