RIYADH, 6 June 2007 — Saudi Arabia seeks to nearly triple the volume of insurance premiums to at least SR20 billion ($5.3 billion) by the end of 2017, local newspapers yesterday quoted the central bank’s deputy-governor as saying.
“Efforts deployed ... and the future developments in the insurance sector over the next ten years target raising insurance premiums to at least SR20 billion at the end of that period,” Mohamed Al-Jasser said in comments carried by several newspapers.
Insurance premiums in the Kingdom totaled SR7 billion at the end of 2006, Jasser told the annual meeting of the Saudi Economic Association in Riyadh.
The Saudi government has given licenses to 26 insurance firms and is considering applications by 10 others to try to open up the insurance sector in the world’s top oil exporter on condition they sell shares in initial public offerings.
So far, 14 of them have sold their shares in IPOs that have been largely oversubscribed. Malath Insurance Co.’s shares are trading 225 percent above the price of the January offering which was almost four times oversubscribed.
Shares of Mediterranean & Gulf Insurance and Reinsurance (MedGulf) are 167.5 percent above the price of the offering that was nearly three times oversubscribed in February.
Standard & Poor’s estimated last year that per capita premiums in the Gulf were around 2 percent of those in Europe.Governments are trying to develop the insurance industry as they expand financial services to diversify economies away from energy exports. The Saudi government has passed new laws making health and car insurance compulsory. That coupled with the growth of Takaful, a Shariah-compliant form of insurance that operates along the lines of mutual funds, is driving growth in the industry.
Sultan ibn Mohammed ibn Saud, chairman of Arabian Shield Insurance Co. has said revenues in the Saudi insurance sector are expected to triple from their 2005 levels to SR15 billion in five years. His company floated a 40 percent stake in March in an IPO that was 3.5 times oversubscribed.
