Press Release - MARCH 20, 2017
A.M. BestTV: Regulatory Changes Help Spur Profitability for Saudi Insurers, Says A.M. Best Senior Financial Analyst
FOR IMMEDIATE RELEASE
OLDWICK - MARCH 20, 2017
Additionally, many of those insurers, as well as others, earned a profit in 2016 compared with 2015.
“One of the biggest headline numbers is the improvement in overall profitability,” said Siddiqui. “The overall profitability for the Saudi market improved to 2.5 billion riyals in 2016 from about a billion riyals in 2015. What is also very important to note is that the number of companies making a profit has increased. In 2015, only 19 out of the 33 companies made a profit, as compared to 2016 where 27 out of 33 did.”
Siddiqui believes one of the biggest drivers of this improvement is underwriting discipline. He said that, “the majority of profits are coming from the core insurance operations of these companies rather than gains and losses made from investment activities. As a result, insurance profits have increased to about 1.7 billion riyals from about 600 million riyals.”
Looking forward, Siddiqui sees growth as being a key concern. Although, growth was modest in 2016 (only 1%), he believes there are avenues available for companies to look for growth.
“The Saudi insurance market, as far as motor is concerned, is considered largely uninsured. An estimated 55% of vehicles in the country are uninsured. This represents a large and potentially untapped market for insurance companies.”
To view the Best’s Special Report on Saudi insurers, titled, “Stability Returns to Saudi Insurers but Growth Prospects Remain Cloudy,” go to http://www3.ambest.com/bestweek/purchase.asp?record_code=258708 .
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