Saudi insurance sector to remain resilient amid geopolitical tensions: Jefferies

The Saudi insurance sector is expected to remain stable and resilient despite the ongoing geopolitical tensions and the war in the Middle East, said financial group Jefferies.

It added that local insurers—including Tawuniya, Bupa Arabia, and Rasan—could benefit from any repricing of property and casualty (P&C) insurance resulting from the conflict, according to Reuters.

The attacks witnessed in the region so far have not caused any significant disruption to the operations or financial positions of Saudi insurance companies. These companies typically transfer a large portion of risk to international reinsurers, and their exposure to P&C insurance in conflict-affected areas remains limited, the group said.

Jefferies also expects the Saudi insurance sector to remain resilient in the event of a short-term war.

It also added that the Saudi Central Bank’s (SAMA) decision not to proceed with interest rate cuts, due to higher oil prices, could help improve investment returns for local insurers.

Jefferies expects that, while demand for P&C insurance and government-related projects may decline, this will be offset by higher global pricing for such insurance, helping insurers maintain revenues and profit margins even with fewer policies issued.