The Insurance Authority (IA) has issued a circular directed at licensed insurance companies intending to enter into reinsurance agreements (Facultative or Treaty) or dealing with foreign reinsurance companies.
The circular says that the insurance companies shall verify that foreign reinsurance companies have registered on the Authority's designated platform. They must comply with the new directive by no later than 1 March 2026.
Additionally, reinsurance brokerages are required, when providing their services, to verify the registration of foreign reinsurance companies.
The circular added, “The registration of foreign reinsurance companies on the platform does not exempt insurance and reinsurance companies from verifying, prior to signing any agreement or dealing with such companies, their compliance with the requirements stipulated in Article 42 of the Implementing Regulations of the Cooperative Insurance Companies Control Law.”
The Authority warns that it will take regulatory action against licensed insurance companies that have entered into new or renewed reinsurance contracts with foreign reinsurance companies that are not registered on the Authority's designated platform by the specified deadline.
Requirements under Article 42 include:
1. An insurance company wishing to engage in reinsurance treaties outside the Kingdom shall ensure that the following criteria are met:
a) The foreign reinsurer is licensed and authorised to transact the kinds of insurance proposed in the Kingdom in its country of domicile.
b) The insurance supervisor of the foreign reinsurer must authorise the exchange of relevant information with the IA.
c) The foreign reinsurer must maintain separate records and financial statements of all Saudi operations and be ready to provide the IA with any related information upon request.
d) The insurance company shall provide the IA with the reinsurer’s financial statements related to the most recent financial year.
e) The insurance company must provide the IA with the latest regulatory or supervisory report issued by the foreign reinsurer’s supervisory authority.
2. The insurance company shall select a reinsurer, at a minimum, with an S&P Rating of ‘BBB’, or its equivalent rating from a recognised international rating organisation. If the company wishes to do business with a reinsurer that is not rated by any international organisation or has a rating less than the minimum required, the company should obtain the prior written approval of the IA.