“The new synergy will significantly cut operating expenses, mainly leasing costs. The new entity will operate through a single headquarters in the joint markets where they operate,” Borno said.
It will also capitalize on the broad experience of professional cadres in both companies, as the local insurance sector suffers a lack of skilled employees. The merger will also boost Saudization rates in the new entity.
Both firms will achieve geographical integration owing to Gulf Union’s solid client base. In addition, Gulf Union’s operations are focused on the Eastern province, while Al-Ahlia focuses on the Central province.
The merged entity will also help both insurers provide integrated products, Borno said
The consolidation move is subject to shareholders’ approval. Upon receiving the green light, both insurers will begin finalizing the required paperwork.
“No brand has been yet approved for the merged entity,” he added.
In March 2017, the Tadawul-listed insurers started talks for a potential merger, Argaam reported.