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ACE Insurance and Reinsurance Brokers currently generates around 60 percent of its business from Saudi Arabia, but is hoping that new partnerships with US-based Gallagher Global Brokerage, one of the world’s largest insurance broking and risk management firms, will help boost its presence in the Kingdom and wider region.
Under the agreement, MIG Holding, ACE’s parent company, will take a 70 percent stake in the new entity, while the remaining 30 percent will be retained by Gallagher.
ACE has deep roots in the Kingdom, dating back to 1952 when the company was founded in Alkhobar.
“For more than 68 years we have been a key driver in the evolution of the insurance industry in the Kingdom and across the MENA region,” Nagib Bahous, president and CEO of MIG Holding, told Arab News.
“Currently, Saudi Arabia makes up around 60 percent of the total business and it offers strong growth potential. With Saudi Vision 2030 now amplifying, it is imperative to maintain and develop a strong Saudi presence. We are confident that the joint expertise of ACE and Gallagher will support the ACE operation and make a difference in a competitive marketplace,” he added.
The Kingdom’s insurance sector closed the 2020 financial year on a high note, with the aggregate net profit of local insurance firms increasing 47 percent year-on-year in the fourth quarter.
Thirteen insurers recorded higher profits in 2020, with the top performer recording a 1,081 percent surge in income, despite the pandemic.
“This will be another challenging year as the recovery from the pandemic and return to normal life not expected before the year’s end. Nevertheless, we are optimistic about prospects, particularly in KSA,” Bahous said.
“The Kingdom has a number of well-established sectors, and is growing in areas including international real estate, financial services, marine, aviation and tourism. We expect to continue to see growth in these sectors as life settles into the new normal once more,” he added.
S&P Global Ratings, in its latest report on the GCC insurance sector, said it expected to see growth in Saudi Arabia due to regulatory initiatives. In the GCC, it forecast its ratings on insurers will remain broadly stable in 2021 owing to robust capital buffers, despite economic uncertainty relating to the pandemic.
“The industry, like so many others, is changing rapidly and looking ahead. When markets fully recover from the impact of the pandemic, we expect to see a return of double-digit growth across all markets. In several GCC markets, the introduction of compulsory health insurances similar to Saudi Arabia and the UAE will also boost insurance premiums,” Bahous said.
The rate of Saudization in the insurance sector has reached 75 percent compared with 35 to 40 percent in the past and this is something that will be a priority for the new partnership.
“Over 2021, ACE will continue to invest in human capital and attracting the right talent to expand operations and add value to clients. This is key to ACE’s vision for sustainable growth,” Bahous said.
Founded by Arthur J. Gallagher in Chicago in 1927, Gallagher employs over 30,000 people in 56 countries.
“The Kingdom is an increasingly important strategic hub for insurance and enhancing Gallagher’s presence directly in the region is the next logical step in our growth,” Tom Gallagher, CEO of Gallagher Global Brokerage, told Arab News.