Our strategic vision is to evolve into a diversified reinsurance company that's among the 50 largest global reinsurance companies that will support the growth of our economy.
The COVID-19 pandemic has continued to test the resilience of individuals, organizations and nations for two years. Relying on our spirit of resilience, expertise and well-crafted strategies we mitigated the impacts of the pandemic and delivered increased value to our stakeholders.
5.1 A challenging operating context
Compared to the economic contraction of 3.2% in 2020, the global economy was on a rebound and is estimated to have recorded a growth of 5.9% for 2021. Although the growth in economic activity in the second quarter of 2021 was stronger than expected, the impact of the COVID-19 variants led to increased mobility restrictions and financial market volatility at the end of 2021. The rapid evolution of business and operating models has created new risks such as cybercrime and supply chain disruption, whilst pandemic-related costs and low interest rates placed additional stress on insurers and reinsurers influencing pricing, risk appetite, underwriting practices, and capacity supply. Even as these risks create both challenges and opportunities, we extended ongoing support to our clients with the knowledge and expertise necessary to meet these challenges.
5.2 A winning strategy
The success of our strategic focus is reflected in our solid performance as we supported resilience in challenging times. Our strategic vision is to evolve into a large and well-diversified reinsurer contributing to the growth of our economy and be ranked among the Top 50 global reinsurers.
We have taken into consideration several key factors in our strategy formulation, including the evolution of the (re)insurance regulatory landscape, the international reinsurance landscape and global consolidation trends, our national agenda, and creating shareholder value. We focused on leveraging our competitive advantage in the Saudi market through improved market retention and capitalizing on the growth prospects of our economy.
Diversification remains central to our strategy as we strive to minimize concentration and accumulation risks to ensure a well-balanced reinsurance portfolio. To achieve this, we are spreading our business across many business lines, striking a balance between proportional and non-proportional contracts and through geographic diversification. Our portfolio is spread across over 40 markets in the Middle East, Asia, Lloyd’s market and Africa.
Through ongoing investment in capability building, we have empowered our teams across underwriting, actuarial, analytical, and claims management to deliver an exceptional service to our clients. In line with our strategy to develop international business, we have been successful in building strong relationships with partners and brokers outside our home market, projecting an image of an emerging and reliable Middle Eastern reinsurer. Our prudently expanding international footprint testifies to our diversification strategy with international business representing 57% of our portfolio in 2021. This signifies our ability to deploy our technical and business development capabilities to build a strong footing in the international markets during challenging times to reinforce profitable growth.
In response to the pandemic, we have significantly enhanced our communication facilities and data connectivity and strengthened cybersecurity protection to ensure maximum availability of our IT services to deliver an uninterrupted service to our clients.
The effectiveness of our business model is amply demonstrated in our resilient and robust performance for the year. The Gross Written Premium (GWP) grew by 19.33% to SR 1,116 million in 2021, recording the highest YoY growth in the history of Saudi Re.
5.3 A robust performance
The effectiveness of our business model is amply demonstrated in our resilient and robust performance for the year. The Gross Written Premium (GWP) grew by 19.33% to SR 1,116 million in 2021, recording the highest YoY growth in the history of Saudi Re. Total assets grew by 11.18% to SR 3.12 billion, while our technical reserves reached SR 1.6 billion as of 31 December 2021. 2021 earnings were supported by an increase in the net underwriting income by 2.5%, while investment income grew by 25% creating a reasonable balance between the two revenue streams. In 2021, the capital was increased by 10% through a share bonus, demonstrating favorable shareholder value. We demonstrated strong financial flexibility with non-existent leverage and good access to capital markets. Our strong asset quality is manifested by our investment portfolio, which is considered to be on a par with that of an A-rated company. The solid financial position was also reflected in maintaining our A3 rating by Moody’s with a stable outlook.
5.4 Our commitment to sustainability
Being among the region’s leading reinsurers, setting the standard in sustainability is part of our mandate. Recognizing the role of sustainable insurance in meeting the changing demands of stakeholders, we redeveloped our sustainability framework with a focus on integrating Environmental, Social and Governance (ESG) factors into our business model for sustainable practice. Our sustainability framework was developed through the combined consideration of the best interests of stakeholders and in alignment with national and international standards including the United Nations Sustainable Development Goals (UN SDGs) and the Principles for Sustainable Insurance (PSI). As the first Middle Eastern reinsurer to publish a sustainability report, we aim to set the bar in adopting sustainable practices and ESG performance voluntary disclosure and improve the image of insurance in society. As a Sharia-compliant company, we believe that sustainability resides within our core business and investments.
5.5. Our national contribution
We remain committed to national development, supporting the actualization of the Saudi Vision 2030. We create opportunities for Saudi citizens through training and development and empowering women. We increased the Saudization ratio to 75% in 2021 as part of our endeavor to develop a national reinsurance industry.
Being the sole reinsurer in a transforming market, we serve as a catalyst for promoting professional practices, improving offerings, and addressing insurance gaps. Capitalizing on our technical and financial capabilities, we engaged in several initiatives including contributing to the development of the technical standards and leading the mandatory inherent defects insurance program, which aims to provide protection to assets and the enhance the quality of constructions.
Saudi Re efforts further align with the national agenda by contributing to the retention of reinsurance premiums within the Kingdom in support of local content development and also by exporting reinsurance services, which accords with the national goal to grow the non-oil gross domestic product.
5.6 Building an organization of repute
As a responsible reinsurer, we are dedicated to the highest standards of corporate governance. In tandem with national and international regulations, we aim to build an environment that promotes trust, transparency, and accountability; fostering long-term investment, financial stability and business integrity within the economy. Our governance system ensures the protection of the rights of shareholders and stakeholders, emphasizing the competency and accountability of the Board and the executive management team. To that effect, in 2021, we conducted an independent Board effectiveness assessment, which provided recommendations on means to further improve the Board effectiveness and therefore company performance. Also, our 2021 Annual Report contains extended corporate information beyond regulatory disclosure requirements for the purpose of providing the stakeholders with additional insights into Saudi Re business and performance.
5.7 A look to the future
Looking ahead, we firmly advance with the execution of our Strategy Towards 2026 as we aim to sustain diversified and profitable growth. Our competitive advantage in our home market offers unique opportunities locally and at the same time serves as a stepping stone for diversification internationally. We are eying organic and non-organic growth opportunities in the international markets that can improve earnings through scale building and diversification. Our future endeavors remain focused on serving shareholder interest.
5.8 Grateful thanks
The year 2021 has not been an easy one, but we look ahead with confidence in our business and resolve to continue working towards our vision. I extend my appreciation to our employees for their engagement and dedication in these unprecedented times. I am grateful to the regulators for their valuable advice and guidance. I thank our investors for their continued trust and support, and our clients around the world for their confidence in our Organization.
We are truly committed to creating sustainable value for you.
Chairman of the Board of Directors