The insurance financial strength rating (IFSR) of Saudi Reinsurance Company’s (Saudi Re) has been upgraded by Moody’s Ratings to A2 from A3, while the firm’s A1.sa national scale IFSR has also been affirmed. At the same time, the reinsurer’s outlook has been changed to stable from positive.
The Saudi Arabia domiciled reinsurer primarily writes reinsurance in its domestic market, supported by reinsurance from the wider Middle East, Africa, Asia and in other international markets.
Moody’s stated that the upgrade of Saudi Re’s IFSR reflects its strengthened business and financial profiles post Saudi Arabia’s Public Investment Fund’s (PIF, Aa3 stable) acquisition of a significant minority stake in the company.
PIF’s involvement also provides access to additional capital to support its expansion locally and internationally.
The stronger rating also reflect the government’s implementation of enhanced domestic cession regulations, which to recap, increased the mandatory cession to local reinsurers from 20% in 2023 to 30% in 2025, on a right of first-refusal basis, making Saudi Re well-positioned to enhance its market position and growth prospects.
Moody’s explained that the upgrade also reflects its expectation that Saudi Re will continue to benefit from ongoing growth and diversification of the Saudi economy and government initiatives to drive growth in the local insurance industry.
Additionally, it should be noted that Saudi Re’s increased capital base, well-diversified business profile, and central role in supporting the local insurance industry positions it to withstand potential shocks and expect limited impact on the company from ongoing trade tensions and heightened financial market volatility.
Moody’s stated, “We expect that its strong market position and affiliation with PIF will support continued growth in business volumes as market opportunities expand. Strong capital adequacy and its track record of underwriting discipline underpin its ability to maintain balance sheet strength and profitability despite high growth.”
Following the successful completion of two significant transactions with PIF and Probitas, Saudi Re’s shareholders’ equity increased by 75% to approximately SAR 2 billion in January 2025, up from SAR 1.14 billion at year-end 2023.
Moody’s added, “Saudi Re’s profitability is good and has been relatively stable despite profitability challenges facing the broader Saudi insurance market. The reinsurer’s combined ratio was 93.9% in 2024, and its reinsurance service results increased by 20% to SAR 143 million in 2024 from SAR 120 million in 2023.
“Despite potential challenges arising from macroeconomic uncertainty and financial markets volatility, we expect Saudi Re’s profitability to remain good over the next 12-18 months, supported by both underwriting performance and investment returns. It’s a good geographical mix, along with the development of new products, that will positively contribute to the continued diversification, mitigating potential challenges.”
Moody’s will continue to monitor the reinsurer, however, given the upgrade, there is limited upward pressure on Saudi Re’s ratings. There may be upward pressure arising in the event of a significant increase in the insurer’s business and geographic diversification while maintaining its current strong financial and operating profile.
Ahmed Al-Jabr, the Chief Executive Officer, Saudi Re, commented on the developments, “We are very pleased to receive this recognition of Saudi Re’s financial strength and competitive position which provides assurance to our investors, regulators, clients, partners and all stakeholders, and reinforces their confidence in Saudi Re’s credit worthiness, financial standing and strategic direction.”
In March, Saudi Re announced a recommendation to increase its capital by 46.6% to reach SAR 1.7 billion through a bonus share distribution, while reporting its financial results.
