Saudi Arabia’s PIF completes acquisition of 23.08% stake in Saudi Re

Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), has completed the acquisition of a 23.08 per cent stake in Saudi Reinsurance Company (Saudi Re), a deal that is set to enable the company to scale up domestic capacity to meet rapid local growth and strengthen the kingdom’s insurance sector.

PIF’s investment is poised to bolster the Saudi insurance sector. It will empower Saudi Re to offer superior reinsurance solutions, equip insurance companies with enhanced risk management capabilities, and enable them to provide comprehensive coverage to policyholders while mitigating earnings fluctuations.

“A better capitalised Saudi Re will be more able to meet rapid growth in demand and devise new products while having increased capacity to expand in domestic and global markets,” the fund said in a statement.

The investment is expected to increase reinsurance premiums staying within Saudi Arabia, grow the local reinsurance sector, and improve coverage for commercial activities for insurance firms and companies in general.

Founded in 2008, Saudi Re holds investment-grade ratings of A- from S&P Global and A3 from Moody’s. The reinsurance firm’s performance has been robust, with total written premiums reaching $520m (SAR1.94bn) in the first nine months of 2024. It achieved a compound annual growth rate of 17 per cent over the five years up to the end of the 2023 financial year.

“By investing in Saudi Re, PIF is reinforcing a leading regional reinsurer and strengthening Saudi Arabia’s insurance sector, which is an essential component of sustainable economic growth. This enhances access to quality financial services for insurers and their policyholders and strengthens the sector,” said Sultan Alsheikh, head of Financial Institutions in MENA Investments at PIF.

Meanwhile,  PIF is central to Crown Prince and Prime Minister Mohammad bin Salman’s plans to diversify the economy away from reliance on oil revenues by building new industries and investing in infrastructure development projects.

Since 2017, the $925bn sovereign fund has created 95 new companies and over 644,000 direct and indirect jobs. Last October, PIF Governor Yasir Al Rumayyan said that the fund’s focus was shifting to the domestic economy as it looked to develop new industries and promote economic diversification.

The fund owns stakes in tech companies such as ride-hailing firm Uber Technologies, soccer teams including English Premier League’s Newcastle United, and electric carmakers Lucid and Ceer. It is also funding a host of new cities in the desert such as the $500bn futuristic NEOM City and the Red Sea Development Company’s mega tourism project.

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