The new entity that will result from the merger of Gulf Union Cooperative Insurance Co. and Al-Ahlia Insurance Co. aims initially to dominate 2.5% of Saudi Arabia's gross written premiums (GWPs) during 2021, Mesheal AlShayea, CEO of Al Ahlia Insurance, told CNBC Arabia.
The top executive said that this will reflect positively on the new entity’s operations, including improved solvency margins and higher investment rates, helping it to turn profit next year.
The new market player will account for SAR 750-780 million written premiums by the end of this year, or less than 2% of the market's GWPs, he noted.
According to AlShayea, the merger has several advantages, including the achievement of integration at the level of products and human capital for both companies. It will also improve assets by providing stronger capital, and achieve shareholders’ goals.
He highlighted that the new entity has SAR 500 million liquidity, while assets will be of higher value.
Both companies have different products, which will be consolidated so as to capitalize on all points of sale.
Since Al Ahlia has a broader presence in the medical malpractice insurance, the new entity will be more able to expand in this product. On the other hand, Gulf Union offers the visitors insurance, which is not offered by Al-Ahlia, which will also be expanded by the new entity, AlShayea concluded.
The two companies said yesterday the effectiveness of the merger resolution, pursuant to which all assets and liabilities of Al-Ahlia will be transferred to Gulf Union by issuing new shares, according to Argaam's available data.
The Saudi Stock Exchange (Tadawul) delisted Al-Ahlia Insurance shares by the close of trading on Dec. 7, 2020.
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