Switzerland’s Zurich Insurance Group is in talks to enter the potentially lucrative Saudi Arabian market as it seeks to grow its life and non-life insurance businesses in the global emerging markets, according to a senior company executive.
Zurich has been in talks for 18 months about getting its foot in the door in Saudi Arabia through the acquisition of an existing company and its insurance license, Geoff Riddell, the chairman for Asia-Pacific and the Middle East region, told Zawya Dow Jones yesterday on the sidelines of the World Economic Forum in Istanbul.
In the Middle East, Zurich has operations in Qatar, the UAE, Oman, Kuwait, Bahrain and Morocco.
The Saudi Arabian Monetary Authority (Sama), which regulates insurers in the kingdom, is not issuing new licences and must approve takeovers that would give a foreign company permission to operate there.
“It’s finding the right way to get into Saudi,” Riddell said, adding “There are multiple ways of buying in. Does somebody want to exit? Is there a distressed company? Would Sama support that approach? There are some ways of getting in that would look very attractive to us, but Sama won’t necessarily let us do it.” Riddell hoped Zurich would find a way in by the end of the year, but noted there was no rigid timeline.
Insurers see the Saudi market as one of the most promising in the Middle East, given whisker-thin penetration rates and strong economic growth. The International Monetary Fund expects Saudi GDP to grow by 6% this year on the back of strong crude prices.
“It’s wealthy, it’s got a huge population, there’s a massive planned infrastructure spend to try to create new cities and work for that large population,” Riddell said. “There’s zero penetration and there’s a huge upside.”
That push comes against a backdrop of slowing growth in Europe and a drive to diversify into emerging markets that predates the global financial crisis.from gulf times.