Chief Executive Officer's Review
Our credit rating of A- S&P, & A3 Moody’s is a recognition of Saudi Re’s progress and financial strength, and will unlock growth opportunities locally and internationally
Saudi Re has recorded an exceptional 26% growth in Gross Written Premium (GWP) to reach SR 1,403 billion, while maintaining strong foothold in more than 40 markets across the Middle East, Asia, Africa, and UK
Benefiting from our strong domestic position and building upon the Company’s twinned hallmarks of agility and resilience, Saudi Re has delivered exceptional results. 2022 was a sterling year with an exceptional growth of 26% in Gross Written Premium (GWP) reaching SR 1.4 billion – the highest recorded in our history, and a 6.4% increase in profit before zakat, while increasing total equity by 3.7% to SR 1 billion.
6.1 Strategic direction
These accomplishments give us fresh impetus to build on our advantages, honor our pledge to provide superior value, and reinforce our position as one of the top-ranked reinsurers in the Middle East region.
We have been studying a range of organic and inorganic growth opportunities to expand our operations and increase our scale. As always, our direction is anchored to growth that is both, diversified and sustainable, and we remain steadfast in serving the interests of all our stakeholders.
Several factors are propelling our steady course towards achieving the objectives of the Strategy Towards 2026. While the international market witnessed rapidly changing market conditions, the domestic market remained comparatively tranquil, even as it augurs favorable conditions for growth.
The Saudi Central Bank (SAMA) is directing the implementation of a new reinsurance retention mechanism which will strengthen the domestic reinsurance ecosystem and increase the sector’s contribution to the local content. With this, we are hopeful of growing written premiums from our home market by over 5%.
Saudi Re remains privileged to exclusively reinsure the mandatory Inherent Defects Insurance (IDI) program, which has been systematically implemented over phases in the last four years. This was key growth driver for Saudi Re in 2022 and represented a 28% of its total portfolio.
We applaud these initiatives by SAMA to develop the industry and enhance market practices. While they will strengthen the domestic ecosystem, they also provide Saudi Re multiple opportunities to expand internationally and fulfil our vision to be ranked among the top 50 reinsurers in the world.
6.2 Sterling performance
Saudi Re has recorded an exceptional 26% growth in Gross Written Premium (GWP) to reach SR 1.4 billion which is the highest year-on-year growth and the highest premium level ever achieved by us. At the same time, Underwriting results (UW) has increased by 78% to reach SR 127 million, as compared to the SR 71 million of last year. Our unwavering focus on diversification has also delivered a healthy portfolio composition that now features 44% international business.
This growth is aligned with our strategy of achieving economic scale through the main growth drivers of countries across the Middle East, led by Saudi Arabia. Most market segments witnessed improved results and positive performance, despite challenges in some segments like Asia and Life.
In November, Saudi Re signed reinsurance contracts with Probitas Corporate Capital Ltd, starting on 1 January 2023 and effective for one year. Total GWP from these contracts is estimated at SR 194.40 million, and their impact is also expected to reflect on next year’s financial results.
6.3 Authoritative endorsements
While credit rating is important for many industries it is imperative for the insurance sector, as a reflection of the levels of solvency and creditworthiness, and the ability to meet obligations toward customers and creditors. The multi-pronged assessments of strategy, governance, financial performance, and risk management also support investment decisions.
In this context, we are pleased that Saudi Re obtained “A-” long-term issuer credit and insurer financial strength rating, and “gcAAA” regional scale rating with a stable outlook from S&P Global Ratings. In their report, S&P highlighted the strengthening of our competitive position via profitable business growth, diversification, and local and international expansion. They also noted that our exposure to catastrophes and other large risks remains relatively modest, and that the company maintains good capital adequacy that stands above the “AAA” level in S&P’s model.
Concurrently, Moody’s Investors Service, has affirmed “A3” Insurance Financial Strength Rating (IFSR), and “A1.sa” national scale IFSR, with a stable outlook. This is testament to our strong brand and market position in Saudi Arabia and a growing presence in target markets of Asia and Africa. More importantly, it strengthens Saudi Re’s preferential position due to right of first refusal on a portion of premiums ceded by primary insurers; strong asset quality as exemplified by a conservative investment portfolio; and relatively modest exposure to natural catastrophe risks.
While these ratings come in recognition of our progress thus far, it propels us to unlock growth opportunities in global markets, with a broader investor base.
6.4 New milestones
Saudi Re was accorded the title of ‘Reinsurance Company of the Year’ at the 10th Middle East Insurance Industry Awards, held in Dubai. The MENA IR awards are viewed as one of the most prestigious awards in the Middle East and North Africa region, as they are overseen by a panel of independent external judges who bring a diverse range of in-depth insurance expertise to the judging process.
These distinctions fuel our efforts as we continue to elevate the standards and benchmarks of the regional reinsurance industry.
In 2021, we became the first regional reinsurer to publish a sustainability report and demonstrate voluntary disclosure of our Environmental, Social and Governance (ESG) performance. Drawing from its success, we continue to focus on better integration of various ESG factors and parameters into our business model, and strengthen our long-term business relationships as a key aspect of this strategy.
Throughout the year, we marked steady progress in our adoption of the new International Financial Reporting Standard, IFRS 17, and deployed advanced solutions to enable full and seamless transition in 2023.
The year also saw ongoing investments in digital transformation, human resource development and upgrading of technology infrastructure as we continue to streamline our operations and adopt analytics, data integration, and globally benchmarked data warehousing and business intelligence infrastructure. Saudi Re retains its position as the only regional reinsurer with the analytical and actuarial capabilities to understand uncertainties by leveraging risk-and-region-specific catastrophe modelling.
Our performance and our progress are a direct result of the dedication of our team, and their diligent efforts. I take this opportunity to express my sincere gratitude to them.
My appreciation also goes to all our clients, suppliers, partners, and other stakeholders who have contributed to our success. Thank you for your continuing support. We look forward to working with all of you as we continue to deliver exceptional value.
Managing Director and Chief Executive Officer