Country Profile

Saudi Arabia
www.lloyds.com/SaudiArabiaMI

May 2014
filip.wuebbeler@lloyds.com

KEY FACTS
FULL NAME / CAPITAL CITY: Kingdom of Saudi Arabia / Riyadh

GDP (PPP):

US$ 927bn (Global Rank #19)

LANGUAGE:

POPULATION:

29m (Global Rank #44)

IMF CATEGORISATION:

Emerging / Developing

Arabic

MAIN EXPORT PARTNERS:

US 14%, China 14%, Japan 14%, South Korea 10%

(2012)

MAIN IMPORT PARTNERS:

China 14%, US 13%, South Korea 7%, Germany

7% (2012)

MAIN EXPORTS:

Petroleum and petroleum products (90%)

MAIN IMPORTS:

machinery and equipment, foodstuffs, chemicals,

motor vehicles, textiles
2012 Rank

2013 Rank

Change in Rank

EASE OF DOING BUSINESS:

12

22

-10

COMPETITIVENESS:

17

18

-1

FREEDOM FROM CORRUPTION:

51

55

-4

DISASTER

YEAR

ECONOMIC COST (US$ x 1000)

Flood

2009

900,000

Flood

1985

450,000

Storm

1982

Epidemic

2000

Epidemic

2000

Source: Disaster Statistics based on: Prevention Web (2013); Export Statistics based on CIA World Factbook (2013); Doing Business Indicators based on Doing Business (2013), World
Economic Forum (2013), Index of Economic Freedom (2013; Key Stats based on CIA World Factbook (2013), IMF (2014)
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KEY STATISTICS
GOVERNANCE INDICATORS

SIZE OF ECONOMY

WEALTH PER CAPITA

Percentile Rank (1-100) 2012

Purchasing Power Parity (PPP) basis

in International $ bn

Purchasing Power Parity (PPP) basis

in International $

1,400

83

78

Political Stability and Absence of

Violence/Terrorism

33

73

92

Control of Corruption

57

83

84

Rule of Law

1,000
800

55

73

61

75

67

82

600

19

100,000
80,000
60,000

400

40,000

200

20,000

0
2006

Voice and Accountability

120,000

1,200

2012

38,549

57

140,000

30,477

Government Effectiveness

Regulatory Quality

1,600

23,053

Qatar

1,262

QA

884

Saudi Arabia

2012

AE
United Arab
Emirates

556

SA

2018f

2006

2012

2018f

26
SA

AE

QA

SA

AE

QA

TOTAL NON-LIFE DIRECT INSURANCE MARKET*

NON-LIFE DIRECT INSURANCE MARKET

LLOYDS GROSS SIGNED PREMIUMS

Premiums in US$ m

Premiums in US$ m; by OECD Class

Gross Signed Premiums in US$ m; by country of origin

339
216

PA & Health
647

Property

4,000

Liability

3,000
2,000

Saudi Arabia
2012
US$ 5.6bn

200
150

100

91

1,250

184

77

5,645

250

Motor

101

5,000

4,931

7,000
6,000

6,673

8,000

50

MAT

1,000

Miscellaneous

0
2011

2012

SA

AE

2013
QA

3,009

0
2011

2012

SA

AE

2013
QA

All data, sources & data limitations are available for download at www.lloyds.com/comparecountries; * 2013 total non-life based on CAGR projection

LLOYDS TRADING POSITION

Saudi Arabia
www.lloyds.com/crystal

Insurance:

No (except non-insurance entities may place insurance business with a foreign insurer, without the
involvement of a local intermediary or with permission / explicit approval)
Reinsurance: No (permission / explicit approval is required)
Coverholders: No
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BUSINESS ENVIRONMENT
A potentially unstable succession is the key risk. The King's appointment of his brother, Prince Muqrin, as deputy crown prince has deferred succession to
the third generation of princes. However, Muqrin's role will be to pave the way for this transition. Succession is likely to entail a power-sharing arrangement
involving a small coterie of third generation princes, probably surrounding King Abdullah's son Mit'ab and Interior Minister Mohamed bin-Nayef. Should the
throne pass to Crown Prince Salman without first formalising a third-generation successor, factionalism will probably increase. However, succession is unlikely
to affect energy contracts, and a third-generation prince will probably embark on an incremental 'reform' movement.
Non-oil activity will remain the base of support for the economy. Continued strong performances in key sectors such as construction, manufacturing,
transportation, and trade and tourism will drive non-oil GDP growth and underpin the economy's 4.4% expansion in 2014. The oil sector will also contribute to
the headline rate as regional instability and turmoil continue to shut in supplies.
Fiscal spending focuses on socioeconomic issues. Saudi Arabia's 2014 budget continues to target spending on education and employment, social
services, and housing and infrastructure investment. The kingdom dons massive foreign assets and official reserves that will continue to provide a substantial
financial backstop, even as global oil prices soften this year, and with an estimated budgetary break-even price of about $76/barrel, it will have room to
manoeuvre on the fiscal front as well.
Saudi Arabia is increasingly concerned by the prospect of an improvement in US-Iranian bilateral relations. Iran's relations with Saudi Arabia are
generally strained and shaped by Saudi fears of Iran's potential in becoming a rival oil exporter that can support an expanding number of regional governments
and proxy groups. As a result, the improvement in US-Iranian bilateral relations in 2013 is a serious concern for Saudi Arabia, whose rulers are losing trust in the
reliability of the US as an ally. Saudi Arabia will continue to try to derail any comprehensive Iran-US agreement, but a serious rift with Washington is unlikely.
The US will remain the kingdom's guarantor of security and, although token gestures towards diversifying procurement may be made, outright
cancellation of US contracts is unlikely. Saudi Arabia will, therefore, continue to challenge Iranian influence, but within parameters deemed acceptable by the
US.

GROSS DOMESTIC PRODUCT (GDP)

TOP-10 SECTORS (BY VALUE ADDED)

BUSINESS ENVIRONMENT INFORMATION

(nominal GDP levels in billion US$; Real GDP change)

(value added in billion US$ & 2014 Change in real %)

(provided by IHS Global Insight, May 2014)

9%

1,200
8.5%

7%

6.8%

900

6%
4.7%

600

4.9%

4.7%

4.8%

4.2%

5%
4%
3%

300

2%

1.8%

1%
0

0%
2009

2010

TOP SECTORS

8%

7.4%

2011

2012

2013

2014

2015

2016

2017

2012
Value
Added

2013
Percentage
Change

1. Oil and Gas Mining

2. Public Admin. and Defence
3. Construction
4. Refined Petroleum and Coke Prod.
5. Retail Trade - Total
6. Agriculture
7. Banking and Related Financial
8. Wholesale Trade
9. Specialty Chemicals (ex. Pharma)
10. Communications

328.3

-2.5

70.4

10.1

26.3

7.2

22.8

4.0

13.5

4.1

12.6

2.1

12.3

4.6

10.7

1.1

8.5

0.9

8.0

4.7

Top-10 Total

513.4

For daily updates visit: > www.ihsglobalinsight.com

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INSURANCE ENVIRONMENT
Major Direct Insurers: 2010 & 2011 Top-10 Market Players 2012 DIRECT PREMIUMS
(Net Earned Premiums in % of total)
(Gross Written Premiums in million US$)

QUICK LINKS / USEFUL SOURCES

Motor

All other players

Insurance Market Profiles

> www.iii.org/international/profiles

339
216
1,250

184
SAICO

PA & Health

ALRAJHI

647

Property

ALLIANZ SF

Malath Insurance

Liability

Saudi Arabia
2012
US$ 5.6bn

AXA-Cooperative

U C A

Miscellaneous

Alpen Capital
> http://www.alpencapital.com
Lloyds Agency Network
> www.lloyds.com/agency

MAT

Trade Union

Saudi Arabian Monetary Agency

(SAMA)
> www.sama.gov.sa

3,009

Bupa Arabia

Lloyds Claims Team

> www.lloyds.com/claims

MEDGULF

BUSINESS CULTURE GUIDE

Tawuniya

50

100

150

200

250

300

350

400

450

500

> http://www.kwintessential.co.uk

Source: Regulator: > www.sama.gov.sa

Source: Regulator: > www.sama.gov.sa

(View Resources > Culture Guide)

Amongst the largest insurance markets in the Gulf region: In Saudi Arabia, insurance was regarded as haram (prohibited by faith) until the early 1990s and only in 2003 was a
comprehensive set of regulations developed under the auspices of the Saudi Arabian Monetary Authority (SAMA). A belated three-year transitional period for implementing the new regulations
ended in April 2008. The main classes of business are health (including foreign workers compulsory medical cover) and motor.
Market Players: Besides adhering to the licensing guidelines, insurance companies in Saudi Arabia have to follow a stringent set of rules. All the companies are required to list on the Saudi
Stock Exchange and adhere to the Islamic law. SAMA has stipulated all insurance operators in the kingdom to follow a cooperative business model, thus setting it apart from other regional
insurance markets. In December 2012, there were a total 33 insurance and reinsurance companies operating in Saudi Arabia, and another two companies were approved to be established. In
recent years, Saudi insurers have made increasing use of available facultative reinsurance capacity within the Gulf Cooperation Council (GCC) states, especially in Bahrain and the UAE.
Broker Market: Local insurance brokers are required under the Cooperative Insurance Companies Control Law to be registered and licensed for business in Saudi Arabia. Brokers are required to
have a paid-up capital of US$ 800k. A separate licence and paid-up capital is required for a broking organisation wanting to act as a reinsurance broker. The sector has 64 licensed insurance
brokers, among them Aon, JLT, Marsh and Willis.
Outlook: The insurance market in Saudi Arabia, having traversed a period of consolidation as a result of the introduction of comprehensive supervisory control is now well placed to grow in line
with the oil-rich economy. It is anticipated that competition in the market is likely to remain intense the foreseeable future, although the non-life classes of property, construction and marine,
aviation and transit (MAT) business are likely to continue to depend crucially on reinsurance market capacity and pricing. It is thought that the number of new insurance and/or reinsurance
companies to be licensed in the market in the next few years is likely to be modest. While there is an increasing awareness about risk management among companies, the Saudi insurance
market is relatively new in the country, so the standard of risk management techniques varies significantly.
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LLOYDS BUSINESS
2009-2013 LLOYDS TOTAL PREMIUMS

2013 LLOYDS HIGH LEVEL CLASSES

Gross Signed Premiums; Direct versus Reinsurance; in million US$

Gross Signed Premiums; high level classes; in million US$

140

2013 GROSS SIGNED PREMIUMS*

120

Total

US$ 91m

Direct

US$ 20m

Overseas Motor

0.9

100
80
60

89
74

78

59

40

71

*COUNTRY OF ORIGIN PREMIUMS

20
0

29

19

Direct

27

18

Reinsurance

20

Policyholders are based or

headquartered in this territory;

Premiums may be written outside

this territory;

X
X

Not necessarily where risks are located

May differ to what is reported to
local regulator (dependent on local requirements).

Property (D&F)

16.1

Marine

28.6

Energy

18.0

Casualty

6.9

Casualty Treaty

0.7

Accident & Health

4.5

10

15

20

25

30

SOURCE: Market Intelligence based on *Gross Signed premiums; Xchanging (2014); unaudited figures based on country of origin and processing by calendar year; see Appendix for details

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35

APPENDIX
MACRO-ECONOMIC & BUSINESS ENVIRONMENT DATA
Source: IMF (www.imf.org/external/data.htm), World Bank (http://data.worldbank.org/), IHS Global Insight.
Notes: GDP data on size and wealth of the economy is reported in Purchasing Power Parity (PPP) terms; this is the most accurate indicator of the true standard of living in
each country and therefore potential demand. To calculate this, GDP is converted from local currency to an international $ currency using PPP exchange rates rather than the
market exchange rate. The PPP local currency-to-international $ exchange rates are determined such that a standard basket of goods has the same price in international $
terms in each country. This adjusts for the differing costs of goods across countries, when converted at market exchange rate s.
INSURANCE MARKET DATA
Source: Reported data derived by Lloyds Market Intelligence team; original source is regulatory bodies, associations, third party information providers.
Notes: Data is reported in US$. For more information, see www.lloyds.com/comparecountries.
Exchange Rates Note: Where required, data has been converted to US$ using annual average exchange rates as per www.oanda.com.
LLOYDS PREMIUM DATA
Source: Reported data derived by Lloyds; original source is Xchanging (data therefore contains only premiums processed by Xchanging).
Notes: Data is reported is US$, on a calendar year basis and is signed gross premiums. This differs from the data published in the Lloyds Annual Report, which is also on a
calendar year basis, but is written gross premiums and sourced directly from Syndicates. Differences are therefore (1) timing inconsistencies between signed and written gross
premiums; (2) inconsistent use of exchange rates by Syndicates and Xchanging; & (3) incompleteness of Xchanging data set for certain classes of business (a substantial
amount of premium is not processed by Xchanging and missing from the REG 258 data set; this comprises, for example, UK Motor).
Exchange Rates Note: Data has been converted to US$ using monthly exchange rates provided by Xchanging.
Definitions:
Gross Signed Premiums: Original and additional inward premiums, plus any amount in respect of administration fees or policy expenses remitted with a premium but
before the deduction of outward reinsurance premiums.
Calendar Year: Relates to the calendar year in which the premium, additional or return, is processed by Xchanging. This is irrespective of the actual underwriting year of
account, which is determined by the inception date of each risk.
Country of Origin: Denotes the domicile of the insured party (i.e. the coverholder or policyholder). This is the country from which demand for the insurance / reinsurance
emanates, & is irrespective of the country to which the risk is classified for regulatory reporting purposes.
Example: A policy holder in the UK insuring a holiday home in France would be classified as a UK risk by Country Of Origin, but French for regulatory reporting
purposes. Similarly a risk incepting on 1st December 2007 would be classified at 2007 Underwriting Year of Account but may not be processed by Xchanging until 2008
and so be allocated to the 2008 processing year.
ACCESSING THE DATA: to access the raw data in this document, and equivalent data for other countries, see www.lloyds.com/comparecountries.

DISCLAIMER: This document is intended for general information purposes only. Whilst all care has been taken to ensure the accuracy of the information, Lloyd's does not
accept any responsibility for any errors or omissions. Lloyd's does not accept any responsibility or liability for any loss to any person acting or refraining from action as a
result of, but not limited to, any statement, fact, figure, expression of opinion or belief contained in this document.
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