JEDDAH, 10 November 2004 — In another move in its drive to privatize state-held enterprises, the government announced plans to sell about three quarters of the shares of the only officially authorized insurance company operating in the country.
Finance Minister, Dr. Ibrahim Al-Assaf, said that 70 percent of the shares of the National Company for Cooperative Insurance (NCCI) would be floated for public subscription on Dec. 21.
The minister has earlier said plans were underway to privatize 20 major sectors including air transport, water, desalination, electricity, mining, telecommunication, civil aviation, highway management, railways, sports clubs, municipal services, health services, desalination plants as well as operation and management of social service centers, employment services and agricultural services.
Maaden, which is fully owned by the government and estimated to be worth several billion riyals, is expected to sell 40 to 50 percent of its stake in the precious metals sector in which it has invested SR600 million. The company established seven years ago with a capital of SR4 billion to utilize the Kingdom’s rich mineral resources.
Seven million shares of NCCI would be sold off. The company is in effect is the monopoly for cooperative insurance in the Kingdom.
According to some estimates the total amount of insurance investment in the Saudi market exceeds SR19 billion ($5.6 billion).
Dr. Al-Assaf said they have reached an agreement with the Capital Market Authority to start NCCI’s initial public offering on Dec. 21, and that the shares on sale include all the shares or 50 percent of the company’s capital owned by the Public Investment Fund as well as 20 percent of the capital owned by the General Organization for Social Insurance (GOSI) and the Pensions Corporation (PC). The two organizations would jointly retain 30 percent of in the company with each having a 15 percent stake. He said the sales of the shares would be confined to Saudi citizens and that details about the price of the share would be announced later.
The declared capital of the company is SR500 million while its paid up capital is SR250 million.
NCCI officials said they expect a rush by subscribers to buy the company shares offered for public sale. PC Governor, Muhammad Al-Kharashi described the floatation of NCCI shares as a positive step that would help motivate investment and expand the privatization base.