LONDON (Standard & Poor’s) Sept. 29, 2015–Although performance varies considerably among Saudi Arabia’s 34 locally incorporated insurance companies, Standard & Poor’s Ratings Services considers that the general trend is a positive one, encompassing improving tariffs, increasing earnings, enhanced capitalization, and growing total premium volumes (see “Tariff Increases And New Business Set To Boost Saudi Insurance Sector By About A Quarter In 2015,”).
We anticipate that the sector’s full-year 2015 gross premiums will be about 25% higher than those in 2014, largely because of price increases on the main insurance lines–group medical and motor. Growing demand for insurance in the near term, combined with regulatory encouragement of highly prudential “actuarial pricing” after the price war of 2012-2013, means that SaudiArabia’s insurers are showing few signs of being affected by the fall in oil prices. Consequently, we consider that the strong growth in sector premiums is likely being driven by the demographics of an expanding population.
Under Standard & Poor’s policies, only a Rating Committee can determine a Credit Rating Action (including a Credit Rating change, affirmation or withdrawal, Rating Outlook change, or CreditWatch action). This commentary and its subject matter have not been the subject of Rating Committee action and should not be interpreted as a change to, or affirmation of, a Credit Rating or Rating Outlook.