The boards of Walaa Insurance Cooperative Company and Al Sagr Cooperative Insurance Co. have approved studying the economic feasibility of a merger, both insurers said in statements to Tadawul.
Over the next six months, the two firms will sign a non-binding memorandum of understanding to conduct the technical, financial and legal studies necessary for the merger process, schedule them and then present the results of these studies to their respective boards of directors.
The merger process is subject to the regulatory approvals.
Last month, Malath Cooperative Insurance Co. and Allied Cooperative Insurance Group (ACIG) extended their initial agreement to study the feasibility of a potential merger for six months.
Although the Saudi insurance market is one of the largest in the Arab Gulf region, some of its smaller firms have suffered the erosion of 50 percent or more of their capital.
Other insurers that have eyed consolidation include Gulf Union Cooperative Insurance and Al Ahlia for Cooperative Insurance, which started talks last year for a potential merger.
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