‘World’s largest’ vertical farm officially opens in Dubai

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CAIRO: Saudi Arabia’s insurance sector is expected to rebound with the economy growing, even as the industry sees a net loss in the first quarter.

While looking at different indicators, the sector seems to be in distress. However, some analysts still see better days for the industry on the back of economic growth and new investment avenues in the Kingdom.

Data from the Saudi central bank, also known as SAMA, showed that the sector turned into a loss of SR153 million ($40.75 million) after zakat and tax in the first quarter of 2022 compared to a net profit of SR100.4 million a year ago.

“Overall, as the Kingdom opens up many new sectors for investment, such as in tourism and mega projects, the Saudi insurance sector, especially those with large capital adequacy, will benefit from the new business growth and possibly lead to mergers among some smaller insurance companies,” said to Dr. Mohamed Ramady, London-based consultant and academician.

The sharp fall in the sector’s financial performance in the first quarter was mainly due to a sizable widening in operating income losses.

According to the data, the losses widened by SR375 million, standing at SR554 million by the end of March 2022, compared to a loss of SR179 million in the same quarter of 2021.

Insurance operating income is the residual profit after deducting all operating expenses, like depreciation, wages, and cost of goods sold. Insurance companies’ revenues increased in the first quarter of 2022, but the level of profitability recorded was low.

The total gross written premium of the Saudi insurance sector went from SR9.9 billion in the fourth quarter of 2021 to SR14.98 billion between January and March of 2022, indicating a noticeable increase in revenues before deducting future expenses.

“The 51.3 percent hike in GWP indicates greater market penetration by the industry as a whole,” said Ramady, “but market segmentation is more important to assess from where the growth is being led.”

The GWP of health, motor, protection and saving, and other general insurance went up in the first quarter of 2022 by 20.8 percent, 4.9 percent, 3 percent and 30.6 percent, respectively, compared to a year before.

As of this year, the ruling client segment in GWP distribution was corporates, holding 66 percent of the total.

The corporate segment was followed by medium enterprises at 13.5 percent, retail at 11.2 percent, small enterprises at 5.5 percent and micro enterprises at 3.9 percent.

Health insurance GWP saw the biggest year-on-year leap as it rose from SR7.83 billion in the first quarter of 2021 to SR9.47 billion during the corresponding period this year. In contrast, the remaining insurance sectors witnessed slight changes.

Likewise, the net written premiums recorded the most significant increase going from SR7.58 between January to March of 2021 to SR9.36 during the same period this year.

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