Share capital increase for the Saudi insurance companies
As mentioned by Atlas Magazine on the 21st of October, 2018, the Saudi insurance companies’ share capital might considerably increase. Discussions amongst the authorities and insurers have not yet come to an end regarding this issue.
Nevertheless, the latest information show that the minimum capitals for insurance and reinsurance activities might face a five-time increase. Thus escalating from :
- 100 million SAR (26 million USD) to 500 million SAR (133 million USD) for insurers
- 200 million SAR (53 million USD) to 1 billion SAR (266 million USD) for reinsurers
The insurance and reinsurance companies shall be allowed a capital of 1.5 billion SAR (399 million USD) in order to operate.Such a drastic increase in capital not only aims at enhancing the companies’ shareholder’s equity but also consolidating the market by bringing together the market participants. The Saudi market currently holds 31 insurance companies and one reinsurance company, Saudi Re based in Riyadh.
The current consultations between the Saudi Arabian Monetary Agency (SAMA) the insurers are disadvantageous these latter whose profitability has been declining for two years now.This is mainly caused by the slow economic activity, the insurers’ non-compliance to tariff regulations as well as the deficit of the motor activity.
Read also | Saudi Arabia: Planned increase in minimum capital requirement for insurance companies
