Saudi Arabian insurance market consolidation to accelerate

Written by Adam Cadle

11/06/2025

Saudi Arabia’s insurance market consolidation will accelerate over the next two years, driven by new regulatory capital requirements and weak underwriting profitability on intense price competition, Fitch Ratings has said.

Some smaller insurers may struggle to meet the requirements or remain profitable, and may merge with or be acquired by larger insurers as a result, Fitch said. At least three potential mergers are currently under evaluation: Liva and Malath, Salama and Saudi Enaya, and MedGulf and Buruj. The merger of Arabian Shield (Insurer Financial Strength (IFS) rating: A-/Stable) and Alinma Tokio Marine Company in November 2023 was the most recent M&A transaction completed.

Insurers have come under increased regulatory scrutiny since the Saudi Insurance Authority took over insurance supervision from the Saudi Central Bank and the Council of Health Insurance in 2023. The Authority plans to introduce a risk-based capital regime in 2027 to help strengthen insurers’ balance sheets, and is also focused on improving underwriting discipline and enhancing regulatory reporting requirements.

"Overall, these measures will be credit positive for the sector in the long term," Fitch underlined. "However, they will increase insurers’ regulatory compliance costs, particularly during implementation, which will add to pressure on profitability in the short term. We expect smaller insurers to be more affected by the increased capital demands and compliance costs given their lower economies of scale."

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