The Saudi regulator’s regime for local market reinsurance premium cession takes effect from 1 January 2025, affecting at least 30% of all reinsurance treaties and facultative risks, Saudi Re noted in remarks published on the country’s stock exchange website.
Saudi Re has announced the potential financial impact related to the application of the Saudi regulator’s ruling on reinsurance premium cession to the local market, expecting a 5% increase to its domestic revenues as a consequence.
The new mechanism will affect “at least 30% of all reinsurance treaties and facultative risks”, with effect from 1 January 2025.
The regulator’s circular confirms that all reinsurance placements will need to exhaust the local market capacity before placements are made with foreign reinsurers.
“The company would like to clarify that it is expected that the implementation of this mechanism would result in increasing the company’s reinsurance revenue from the Saudi market by more than 5% of the total reinsurance revenue (based on 2023 financial year results),” Saudi Re said.
“The [Saudi regime for reinsurance premium cession] is expected to have an impact on the company’s financial results starting from the first quarter of 2025,” the reinsurer added, its remarks published on the Saudi Exchange website, on which Saudi Re is listed.
The reinsurer grew by 19% reporting gross written premiums of SAR 1.4bn in the first half of 2024.
Saudi Arabia, and particularly the government-led “Saudi Vision 2030” growth strategy, has been cited as the leading source of short to medium term reinsurance growth in the Middle East.
Expectations have been high due to (re)insurance demand created by economic projects, much of which cannot be currently satisfied by the size of the local reinsurance market.
The regulator’s rule will affect business being reinsured into the international market, particularly via the regional reinsurance hub that has developed in Dubai, UAE.
Saudi Re recently announced the appointment of Ahmed Al-Jabr as its new CEO, effective 1 October 2024, previously holding the role in an acting capacity.
Al-Jabr, who has been with Saudi Re since 2011, previously held the position of chief operations officer before being promoted to the role of deputy CEO.
Saudi Re counts itself as a leading reinsurance company in the Middle East region, with operations spanning more than 40 markets, holding an ‘A-’ rating from Standard & Poor’s and an ‘A3’ rating from Moody’s.
The company is focused on executing a “Strategy Towards 2028” with the aim of reinforcing its position and sustaining its profitable growth momentum domestically and internationally.
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