MetLife AIG ANB Cooperative Insurance Co said on Tuesday it had signed a non-binding memorandum of understanding with bigger rival Walaa Cooperative Insurance Co to evaluate a potential merger between the two companies.
Metlife AIG ANB said it has appointed Saudi Kuwaiti Finance House as its financial adviser for the proposed merger in a deal that is likely to be based on a share swap.
Saudi Arabia’s crowded insurance sector is ripe for consolidation after the central bank proposed more stringent risk-based capital requirements to bolster the insurance sector.
The Saudi insurance sector is concentrated in health and automotive, which accounted for more than 80 per cent of gross written premiums in 2017.
Bupa Arabia, Tawuniya and Med Gulf dominate the health market, accounting for 80 per cent of premiums in 2017, while the other 24 companies, with a combined market share of only 20 per cent, lack scale, which may lead to consolidation, Fitch Ratings said in a recent report.