Saudi Arabia’s insurance sector is expected to witness more mergers in 2021, Al-Arabiya TV reported, citing Abdullah Al Towaijri, Head of Insurance Companies Control Department at Saudi Central Bank (SAMA).
Al Towaijri noted that the insurance sector has reached a stage of maturity to recognize the need for consolidation of capital.
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Merger is a feasible option for small-cap insurers to raise their capital, he said, adding that it is also an excellent option to form stronger financial entities amid the large number of players in the market.
The insurance sector is relatively new in the Kingdom and lacks adequate competency, and given the large number of players the available competencies are distributed, Al Towaijri said.
Mergers help concentrate the competencies and create more financially solvent entities that offer better and innovative services and products, he added.
SAMA provides support and advice for companies that seek to merge, said the official, adding that foreign insurance companies are part of the market and are free to assess available options for expansion.
The Saudi insurance market has seen the merger between Walaa Cooperative Insurance Co. and Metlife AIG ANB Cooperative Insurance Co. in March. Meanwhile, Gulf Union Cooperative Insurance and Al Ahlia Insurance announced on Dec. 6 the effectiveness of the merger resolution, according to Argaam data.