Saudi Re to benefit from higher cession requirements in 2024 and 2025

According to Moody's [4], reinsurer Saudi Re is likely to benefit from the increase in the mandatory reinsurance cession rate, which will go from the current 20% to 25% in 2024 and 30% in 2025 for reinsurance treaties. This revision of the legal cession should have a positive impact on Saudi Re's [5] profitability and business profile, as it has the right of first refusal.

This revision has led the agency to confirm the Saudi reinsurer's A3 financial strength rating, and to raise its outlook from stable to positive.

The new legal cession provision was introduced in November 2022 by the Saudi Central Bank (SAMA) in a bid to increase local insurance premium retention and reduce dependence on foreign markets.