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Continuation of the profit pace by achieving SR 124.4 million, an increase of 64%.
In 2023, the world grappled with significant macroeconomic challenges, including the ongoing Russia-Ukraine conflict and a cost-of-living crisis, leading to a decline in global growth. Key drivers of GDP struggled to recover to pre-pandemic levels with forecasts indicating continued economic decline in the upcoming year. Global inflation began to ease due to stringent monetary policies and declining commodity prices, putting strain on the global housing, banking, and industrial sectors. Complex geopolitical dynamics among countries are likely to cause further instability in 2024. Moving forward, global monetary frameworks will play a crucial role in stabilizing inflation, but sustained higher policy rates could increase financing costs, intensifying economic pressures worldwide.
In the Middle East, the deceleration in economic growth was mainly due to decreased oil production, compounded by disruptions in the global landscape. Nonetheless, the non-oil sector displayed resilience and robust growth with economic activity in the Middle East and North Africa region projected to rebound gradually in the next few years as factors hindering growth diminish.
The newly established Saudi Insurance Authority (IA) officially commenced operations on November 23, 2023, functioning as an independent regulator. With a mission to regulate the insurance sector in the Kingdom, the IA aims to enhance its efficiency and stability, aligning with the objectives of Saudi Vision 2030. Among its goals, the Authority will regulate and supervise the insurance sector, safeguard the rights of policyholders, establish principles of insurance contracts, promote innovation in insurance products, and elevate insurance awareness. Furthermore, the IA is expected to focus on enhancing competitiveness to improve service quality and create an appealing investment environment, thereby supporting the insurance sector's role in the national economy. Existing regulations, rules, and instructions pertaining to the insurance sector will remain in effect until further directives are issued. Current insurance policies, claims, channels, and operations will continue uninterrupted, in accordance with relevant regulatory provisions.
The company achieved a net profit before Zakat and tax of SAR 158.6 million in 2023, compared to SAR 91.3 million in 2022, marking a 74% increase from the previous year. The profits after Zakat and Tax increased by 64% to SAR 124.4 million, compared to SAR 76.1 million in the previous year. Additionally, the total shareholders' equity exceeded SAR 1.146 billion by the end of 2023, representing a 13% increase from the previous year, while the earnings per share increased by 65% to SAR 1.4. The company also achieved a 14% increase in gross written premiums, with a total of SAR 1.59 billion in 2023
Saudi Re's robust performance and resilience during challenging periods reflect the effectiveness of our strategy, which is based on key factors such as the evolving (re)insurance regulatory landscape, global reinsurance trends, the goals of the Kingdom’s Vision 2030, and the creation of shareholder value. Our refreshed strategic approach “Strategy Towards 2028”, provides a blueprint that will enable the company to play an anchoring role in domestic retention while driving innovation to assess and adapt to new and emerging risks in local and international markets.
Diversification remains a cornerstone of Saudi Re’s strategy, evident in our expansion into various business lines with a balanced approach to proportional and non-proportional contracts. Geographical diversification has been a priority, with our portfolio now spanning 40 markets: underscoring our ability to strengthen our global presence, even in turbulent times.
Saudi Re has considered number of options to strengthen the company’s capital base and support its future expansion activities. On 4 March 2024 the Company announced signing a share purchase agreement for the sale of its entire stake in Probitas Holdings (Bermuda) Limited (PHBL) with Aviva Insurance Limited for consideration of GBP120 million, to be paid in cash. The Company also announced signing a non-binding Memorandum of Understanding (“MoU”) with the Public Investment Fund (“PIF”) pursuant to which PIF intends to subscribe to new cash shares in Saudi Re by way of capital increase with suspension of preemptive rights.
We believe these major steps would strengthen Saudi Re’s market position, providing a solid foundation to capitalize on emerging opportunities that align with the Company’s growth strategy. Furthermore, they will enhance Saudi Re’s credibility and reputation among investors and stakeholders and contribute to our longterm success and sustainability in the reinsurance industry.
Saudi Re places a strong emphasis on sustainability, recognizing its importance in meeting the evolving demands of our stakeholders. Our sustainability approach is guided by national and international standards such as the United Nations Sustainable Development Goals (UN SDGs) and the Principles for Sustainable Insurance (PSI), reflecting our commitment to responsible business practices. As a pioneering reinsurer in the Middle East, we strive to set a benchmark for sustainable practices in the industry by voluntarily disclosing our Environmental, Social, and Governance (ESG) performance. As a Sharia-compliant company, we uphold the principles of sustainability in our business operations and investments. Additionally, we continuously invest in the development and wellbeing of our workforce, as well as in uplifting our communities through our Corporate Social Responsibility (CSR) activities. Our efforts during 2023 demonstrate our dedication to integrating ESG factors into our decision-making processes and promoting sustainable practices across our organization.
During 2023, a new Board of Directors was elected for a three-year term and the committees emanating from the board were restructured. The board will strive effectively to lead the Company to new horizons and develop its business with the aim of maximizing shareholder value and fulfilling their aspirations, while adhering to the highest governance standards.
During the year, we also worked to approve charters and policies including those related to IFRS 17. We believe that these essential developments to the Internal Audit Charter and Manual, Compliance Policy, Remuneration and Compensation Policy, AML/CTF Policy, and the Business Continuity Management System (BCMF) Policy; will hold Saudi Re in good stead as we navigate changes to the operating environment.
Saudi Re is strategically positioned for remarkable growth opportunities, leveraging our competitive position in the Kingdom and expanding our presence both domestically and globally. We are actively pursuing organic and inorganic avenues to enhance our operations and scale while prioritizing value creation for our shareholders. With a focus on sustainable and diversified growth, we remain steadfast in our commitment to serving the interests of all our stakeholders.
As we celebrate the momentous milestone of 15 years in operation, I extend my heartfelt gratitude to our dedicated employees for their unwavering efforts. I am profoundly thankful to the regulatory bodies for their invaluable guidance and advice, and to our investors for their continued trust in our vision. My appreciation also goes to our clients and partners worldwide for their collaboration and confidence in us. As we look to the future, we remain steadfast in our commitment to creating value and serving all our stakeholders to the best of our ability.
Abdullatif Al-Fozan
Chairman of the Board