RIYADH: Saudi Arabia’s insurance sector is headed for a wave of consolidation as tougher capital rules and fierce price competition squeeze smaller players, Fitch Ratings said in a new report.
The agency expects mergers and acquisitions to accelerate as many insurers struggle to meet new capital requirements or remain profitable amid intense competition and rising costs.
The shakeout comes as the newly established Saudi Insurance Authority, which took over from the Saudi Central Bank and the Council of Health Insurance in November 2023, steps up efforts to stabilize and modernize the market in line with Vision 2030.
Several smaller insurers are already in talks with larger rivals as they look for ways to shore up their capital positions and ensure long-term survival.
“These measures will be credit positive for the sector in the long term,” Fitch said. “However, they will increase insurers’ regulatory compliance costs, particularly during implementation, adding to pressure on profitability in the short term.”
