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Our vision is “To evolve into a large and diversified reinsurer contributing to the growth of our economy aiming to be ranked among the top 50 global reinsurers” which is anchored at the core of our activities. Saudi Re has developed Strategy Towards 2028; a strategic blueprint that will enable the company to play an anchor role in increased domestic retention and drive innovation to better capture new and emerging risks in local and international markets.
Saudi Re focuses on leveraging extensive domestic prospects while expanding internationally to foster diversification, ultimately establishing ourselves as a prominent global reinsurer within the global top 50.
Driven by the dedication to solidify its status as a national champion, Saudi Re pursues two primary strategic objectives aimed at sustaining profitable growth locally and internationally:
The strategy continues to evolve around the following five pillars:
We prioritize the pursuit of scale, which involves expanding our economic scale, earnings, and capital base, as well as enhancing our resilience to major losses.
Our strategy includes diversification, both geographically and in terms of risk type, to ensure a well-balanced portfolio.
We are dedicated to continuously improving our technical and operational capabilities, which include risk management, technological advancements, and human capital development.
We place a high value on building strong relationships, particularly with cedants, brokers, partners, and regulators. Our corporate brand is also an essential factor in fostering positive relationships.
Maintaining financial soundness is critical to the strength and stability of our business. We strive to maintain technical profitability, adequate capitalization, and favourable returns on investment.
Growing economies of scale is a crucial aspect of our strategy, as it enables us to reduce volatility and absorb large losses more easily. By attaining economies of scale, we can make larger investments in developing our capabilities and enhancing our operational efficiency. Furthermore, our scale benefits enable us to earn investment income from premium floats, thereby boosting our investment performance.
To support our expansion efforts, we will continue to explore opportunities in high-growth markets in the Middle East and Asia. The strength of the Saudi Re brand and our cooperative model provide further advantages in these markets.
Diversification is a crucial element of our strategic approach, enabling us to minimize correlated risks, concentration risks, and accumulation risks: ensuring a more balanced reinsurance portfolio is maintained with reduced volatility. As per the recent Saudi Re rating review by S&P, the benefits of risk diversification also contributes in reducing the capital requirements. Our efforts to diversify globally have resulted in a sound portfolio that consists of over 40 markets in the Middle East, Asia, and Africa. At present, our international business accounts for 51% of our portfolio.
Saudi Re also continually strives to build strong capabilities that span the entire gamut of operations in the reinsurance industry. Our underwriting team possesses strong professional skills and an in-depth understanding of the regional risk profile, guided by clearly defined risk appetite parameters. Actuarial and analytical teams work closely with the underwriters to judiciously to better manage our underwriting portfolios, while our streamlined claims management, supported by technical accounting, ensures efficient operations. Saudi Re actively utilizes retrocession to manage risk exposure and mitigate the impact of volatility. Furthermore, our growth and decision-making processes are supported by our advanced capital modelling capabilities, allowing us to make informed and effective decisions.
At Saudi Re, we pride ourselves on our comprehensive operational capabilities. Our team possesses advanced technological, decision-making, and human resources skills. Our client servicing is well supported by advanced technological, analytical, and communication infrastructure, which enables us to be highly responsive to client needs. Our lean and cost-efficient infrastructure allows for efficient operations. We take a holistic approach to risk management, implementing prudent policies and programs and closely monitoring the risk management process through the risk, technical, and Audit Committees of the Board.
Looking to the future, we are committed to leveraging our competitive advantage in the Saudi market by not only retaining our market share but also capitalizing on the growth opportunities presented by the expanding Saudi economy. Saudi Re is also determined to utilize its expertise and experience in the reinsurance industry to achieve sustainable long-term growth in inherent defects insurance and other classes.
Our strategy involves building and strengthening long-term relationships with clients and brokers, which is managed prudently by our skilled underwriting teams. We seek to establish strong links with high-value counterparties, and our markets in Asia are served by the branch in Kuala Lumpur. Brokers are also integral to our business process. Through leveraging the strong links, we have established with retrocession insurers, we are able to increase our capacity by reducing risk.
To maintain the financial health of the Company, financial soundness is continuously monitored using indicators for all criteria, including:
In October 2023, the Board of Directors made the recommendation to increase the Company's capital through a direct offering from an anchor investor the PIF; that will subscribe to new cash shares representing a significant minority ownership in Saudi Re to strengthen Saudi Re’s capital base and support its future expansion activities.
Saudi Re has progressed in finalizing due diligence activities and regulatory submissions requirements and it is expected that transaction will be concluded in second quarter 2024 subject to signing the binding agreement. Al Rajhi Capital was appointed as a financial adviser to Saudi Re and GIB was appointed as a financial adviser to PIF.
Local cession was mandated by article 40 of the Implementing Regulations of the Cooperative Insurance Companies Control Law by the Saudi Central Bank. Insurance and reinsurance companies operating in Saudi Arabia are required to maintain a minimum of 30% of reinsure premium at least with a local provider, unless granted approval by the regulatory authority.
In October 2022, SAMA introduced a new mechanism aiming at improving the enforcement of local retention of reinsurance premiums within the Kingdom and increasing the insurance sector’s contribution to the local content. This new mechanism requires insurance companies to cede a share of all their reinsurance treaties, proportional and non-proportional, to the local resonance market with effect from 1 January 2023.
The cession share, under the new mechanism, starting at 20% in 2023 will gradually increase to 25% in 2024 and 30% in 2025. This new mechanism is expected to strengthen the domestic reinsurance ecosystem and enable the national reinsurance market to play an active role. The increased retention of reinsurance premiums within the Kingdom is expected to have a positive economic impact and contribute to the financial stability of the sector. Being the only specialized local reinsurer, Saudi Re is well-positioned to support the implementation the new mechanism and benefit from potential growth of its home market.
Following a successful implementation of the enforcement of treaty regulation cession, it is expected that a similar mechanism will be soon introduced for facultative business which represents about 40% of reinsurance premium.
In August 2020, Saudi Re announced the signing of an exclusive reinsurance contract with Malath Insurance Company on behalf of the Saudi insurance industry’s participants in the Inherent Defects Coinsurance Program. As part of the arrangement, Saudi Re acts as the exclusive reinsurer for the Saudi Arabian Inherent Defects Coinsurance Program for five years.
The Inherent Defects Insurance (IDI) became a mandatory requirement for contractors involved in private sector construction projects, following the Council of Ministers Resolution No. 509 issued on 5 June 2018. To support the implementation of the IDI program, SAMA issued a standard policy wording for the IDI cover.
The IDI policy has a duration of 10 years for the cover; Saudi Re has put in place retrocession protection as a risk management measure to manage this long-tail business.
The IDI program underwent various implementation phases and during the year 2022 the program witnessed and improved enforcement. Saudi Re has booked SR 385 million of gross written premiums (GWP) under IDI class of business and represented 24% of Saudi Re’s 2023 GWP. IDI program is among the key strategic initiatives as the advancement of IDI implementation stimulates growth for Saudi Re and reflects on its financial performance.
The credit rating of an insurance company plays a critical role in the sector, as it indicates the Company’s level of solvency and creditworthiness, its ability to meet its obligations to customers and creditors, and its financial performance. Credit ratings also assist investors in assessing a company’s strategic approach, risk management, and governance.
Saudi Re was assigned an “A-” long-term issuer credit and insurer financial strength rating and a “gcAAA” GCC regional scale rating, with a stable outlook, by S&P Global Ratings. S&P noted that Saudi Re has continued to strengthen its competitive position through profitable business growth and diversification. The Company’s exposure to catastrophe and other large risks is relatively modest, and it maintains capital adequacy above the “AAA” level in S&P’s model. The stable outlook reflects S&P’s expectation that Saudi Re will maintain excellent capital adequacy and continue to profitably expand and diversify its business over the next two years. S&P also views Saudi Re’s governance practices as effective and appropriate, and the consistency in strategy, and management expertise and experience as a benefit to the Company.
Moody’s affirmed Saudi Re’s “A3” Insurance Financial Strength Rating (IFSR), with a Positive outlook, in 2023. The rating reflects the Company's strong brand and market position in Saudi Arabia as the sole reinsurer and its growing presence in the target markets of Asia, Africa, and Lloyd’s. It also reflects Saudi Re’s preferential position in the Saudi market and its strong asset quality evidenced by its conservative investment portfolio. The rating also reflects the Company's strong capital adequacy, non-existent leverage, and good access to capital markets in Saudi Arabia, given its listing on the Saudi stock market, in addition to a broad investor base. The expanded capital base is expected to provide a platform that helps Saudi Re strengthen its market position in the broader Middle East region while providing additional capacity to support insurance market growth in Saudi Arabia and pursue further international expansion opportunities to diversify its business in line with the Company’s strategic plan.
The two A-level ratings, A-from S&P and A3 from Moody’s, reinforce the confidence of clients, shareholders, regulators, and all stakeholders of Saudi Re and its future. These ratings are critical in ensuring Saudi Re’s financial ability when dealing with reinsurers and in supporting the Company’s growth efforts in the international markets.
| Gross written premium growth | Combined ratio % | Investment return % | Return on equity (ROE) % | Expense ratio % | Credit rating | Solvency ratio % | Regional reinsurance ranking | |
| 2022 | 1,403,281 | 92.21 | 2.27 |
7.96 | -0.2 | A- S&P A3 Moody’s | SAMA 291 S&P 133 | Among Top 3 Regional Reinsurers |
| 2023 | 1,597,000 | 84.38 | 7.47 | 12.3 | 5.5 | A- S&P A3 Moody’s | SAMA 299 S&p 127 | Among Top 3 Regional Reinsurers |
| Success factors | Description | Saudi Re’s progress |
| Clear strategy and proposition |
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| Geographic diversification |
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| Scale benefit |
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| Strong client/distribution relationships |
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| High limits/ line leader |
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| Active broad range of risks |
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| “A-rated” capital |
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| Robust technical capabilities and operational effectiveness |
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