Troubled insurers in Saudi Arabia face the option of mergers
Monday, 06 29 2015, Category: Insurance and Reinsurance, Country: Saudi Arabia
Approximately 4 Saudi insurance companies listed in the local stock market incurred financial losses exceeding 50% of their capitals, whereas around 7 other companies suffer from achieved financial losses (according to their financial results in the first quarter of the current year), which gives an indicator about the importance of overcoming the current financial difficulties.
In this context, the merger activities between financially distressed companies are among the possible options available to the Saudi insurance companies in order first to overcome the successive financial losses and second to strengthen competitive positioning, especially given that the insurance market in the country is one of the most growing markets in the region.
The prices of the health insurance policy, the motor insurance policy and other policies witnessed a sharp growth in Saudi Arabia during the past few months. Therefore, there is an increased opportunity for insurance companies to transform their previous losses into profits. At the same time this trend increases the profitability of the large companies in the sector.
Source: Asharq Al-Awsat