The Insurance Authority has issued a circular that will require at least 30% of all reinsurance treaties (proportional and non-proportional) to be ceded to licensed reinsurance companies In the kingdom, said Saudi Reinsurance Company (Saudi Re).
The reinsurance requirement, to take effect on 1 January 2025, aims to increase local reinsurance activity in the country. Local licensed reinsurance companies have the priority to accept or decline the cessions. The Insurance Authority’s circular on the new reinsurance mechanism was dated 14 November 2024.
Several (re)insurance companies, that are also licensed to conduct reinsurance activities, yesterday issued stock exchange statements outlining how the new reinsurance mechanism would affect their financial results.
Saudi Re, the first locally incorporated full-fledged reinsurer in the kingdom, is expected to be the biggest beneficiary of the move. Saudi Re said in a statement lodged with the Saudi Exchange (Tadawul) that it expects that the implementation of the rule would result in an increase in the company’s reinsurance revenue from the Saudi market by more than 5% of total reinsurance revenue.
Tawuniya, one of the three biggest insurers in Saudi Arabia, said yesterday that the new rule would positively impact its revenues from the Saudi market. “It is expected that positive financial impact will have an effect on 2025 financial results,” said Tawuniya.
Gulf Insurance Group and LIVA Insurance have also said that the new mechanism is expected to contribute positively to their financial performance, starting next year.
Walaa Cooperative Insurance said that the mechanism will positively affect its financial performance, with results expected to be seen starting in the first quarter of 2025.
Mediterranean & Gulf Cooperative Insurance & Reinsurance said that the new mechanism presents it with an opportunity to reassess its strategy regarding accepting additional reinsurance premiums from local insurers.