saudi country profile

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Country Profile

Saudi Arabia

www.lloyds.com /SaudiArabiaMI

May 2014

[email protected]



ACTS

AME / CAPITAL CITY: Kingdom of Saudi Arabia / Riyadh

AGE: Arabic

GDP (PPP): US$ 927bn (Global Rank #19)

POPULATION: 29m (Global Rank #44)

IMF CATEGORISATION: “Emerging / Developing”

XPORT PARTNERS: US 14%, China 14%, Japan 14%, South Korea 10% (2012)

PORT PARTNERS: China 14%, US 13%, South Korea 7%, Germany 7% (2012)

XPORTS: Petroleum and petroleum products (90%)

PORTS: machinery and equipment, foodstuffs, chemicals, motor vehicles, textiles

2012 Rank 2013 Rank Change in Rank

F DOING BUSINESS: 12 22 -10

TITIVENESS: 17 18 -1

OM FROM CORRUPTION: 51 55 -4

STER YEAR ECONOMIC COST (US$ x 1000)

2009 900,000

1985 450,000

1982 0

ic 2000 0

ic 2000 0

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

© Lloyd’s 2



TATISTICS

RNANCE INDICATORS SIZE OF ECONOMY WEALTH PER CAPITA ile Rank (1-100) 2012 Purchasing Power Parity (PPP) basis

in International $ bn

1,600

1,400

1,200

1,000

800

600

400

200

0

2006 2012 2018f

Purchasing Power Parity (PPP) basisin International $

140,000

120,000

100,000

80,000

60,000

40,000

20,000

02006 2012 2018f

SA AE QA

L NON-LIFE DIRECT INSURANCE MARKET* NON-LIFE DIRECT INSURANCE MARKET

SA AE QA

LLOYD’S GROSS SIGNED PREMIUMS

s in US$ m Premiums in US$ m; by OECD Class Gross Signed Premiums in US$ m; by country of origin 250 Motor

PA & Health

647

184

216 339

1,250 200

150

2011 2012 2013

SA AE QA

Property

Liability

MAT

Miscellaneous

Saudi Arabia 2012

US$ 5.6bn

3,009

100

50

0

2011 2012 2013

SA AE QA

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

D’S 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

© Lloyd’s 3

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9 3 1

5 ,

6 4 5

6 ,

6 7 3

5 5 6

8 8 4

1 ,

2 6 2

1 0 1

2 3 ,

0 5 3

7 7

3 0 ,

4 7 7

9 1

3 8 ,

5 4 9

SA

Saudi Arabia

AE

United Arab

Emirates

QA

Qatar

nt Effectiveness 57 83 78

tability and Absence of

errorism33 73 92

Corruption 57 83 84

y Quality 55 73 75

w 61 67 82

Accountability 3 19 26



NESS ENVIRONMENT

tially unstable succession is the key risk. The King's appointment of his brother, Prince Muqrin, as deputy crown prince has deferred succession to

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

g a small coterie of third generation princes, probably surrounding King Abdullah's son Mit'ab and Interior Minister Mohamed bin-Nayef. Should the

ass to Crown Prince Salman without first formalising a third-generation successor, factionalism will probably increase. However, succession is unlikely

energy contracts, and a third-generation prince will probably embark on an incremental 'reform' movement.

l activity will remain the base of support for the economy. Continued strong performances in key sectors such as construction, manufacturing, rtation, 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

dline rate as regional instability and turmoil continue to shut in supplies.

pending focuses on socioeconomic issues. Saudi Arabia's 2014 budget continues to target spending on education and employment, social s, and housing and infrastructure investment. The kingdom dons massive foreign assets and official reserves that will continue to provide a substantial l 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

vre on the fiscal front as well.

rabia is increasingly concerned by the prospect of an improvement in US-Iranian bilateral relations. Iran's relations with Saudi Arabia are

ly 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

xy 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 they 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.will remain the kingdom's guarantor of security and, although token gestures towards diversifying procurement may be made, outright tion of US contracts is unlikely. Saudi Arabia will, therefore, continue to challenge Iranian influence, but within parameters deemed acceptable by the

DOMESTIC PRODUCT (GDP) GDP levels in billion US$; Real GDP change)

TOP-10 SECTORS (BY VALUE ADDED) (value added in billion US$ & 2014 Change in real %)

BUSINESS ENVIRONMENT INFORMATION (provided by IHS Global Insight, May 2014)

7.4%

8.5%

9%

TOP SECTORS 8%

2012 Value

Added

2013 Percentage

Change

6.8%

4.2%

7%

6%

4.7% 4.9% 4.7% 4.8%5%

4%

3%

2%

1%

0%

1. Oil and Gas Mining 328.3 -2.5

2. Public Admin. and Defence 70.4 10.1

3. Construction 26.3 7.2

4. Refined Petroleum and Coke Prod. 22.8 4.0

5. Retail Trade - Total 13.5 4.1

6. Agriculture 12.6 2.1

7. Banking and Related Financial 12.3 4.6

8. Wholesale Trade 10.7 1.1

9. Specialty Chemicals (ex. Pharma) 8.5 0.9

10. Communications 8.0 4.7 For daily updates visit: > www.ihsglobalinsight.com 2010 2011 2012 2013 2014 2015 2016 2017 Top-10 Total 513.4

© Lloyd’s 4



RANCE ENVIRONMENT

irect Insurers: 2010 & 2011 Top-10 Market Players 2012 DIRECT PREMIUMS QUICK LINKS / USEFUL SOURCES Written Premiums in million US$)

(,

.

(Net Earned Premiums in % of total)

Motor 216

184

PA & Health

647

339

1,250

Insurance Market Profiles>www.iii.org/international/profiles

Saudi Arabian Monetary Agency

(SAMA)> www.sama.gov.sa

7

;'

'

9

Property

Liability

MAT

Saudi Arabia 2012

US$ 5.6bn

Alpen Capital> http://www.alpencapital.com

Lloyd’s Agency Network> www.lloyds.com/agency

>*

Miscellaneous 3,009 Lloyd’s Claims Team> www.lloyds.com/claims

7

*

I JI KII KJI LII LJI MII MJI NII NJI JII

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

BUSINESS CULTURE GUIDE

> http://www.kwintessential.co.uk (View Resources > Culture Guide)

t 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 aensive 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 April 2008. The main classes of business are health (including foreign workers’ compulsory medical cover) and motor.

Players: Besides adhering to the licensing guidelines, insurance companies in Saudi Arabia have to follow a stringent set of rules. Al l the companies are required to list on the Saudichange 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 regionale 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

ears, Saudi insurers have made increasing use of available facultative reinsurance capacity within the Gulf Cooperation Council (GCC) states, especially in Bahrain and the UAE.

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 toaid-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 insuranceamong them Aon, JLT, Marsh and Willis.

: 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 lineoil-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,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 reinsuranceies 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

relatively new in the country, so the standard of risk management techniques varies significantly.

© Lloyd’s 5



78

D’S BUSINESS

013 LLOYD’S TOTAL PREMIUMS 2013 LLOYD’S HIGH LEVEL CLASSES igned Premiums; Direct versus Reinsurance; in million US$

2013 GROSS SIGNED PREMIUMS*

Total US$ 91m

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

89

74 71

59

Direct US$ 20m

*COUNTRY OF ORIGIN PREMIUMS

! Policyholders are based or

headquartered in this territory;

Overseas Motor

Property (D&F)

Marine

Energy

Casualty

0.9

6.9

16.1

18.0

28.6

1929 27 18 20

! Premiums may be written outside

this territory;

Casualty Treaty 0.7

Direct Reinsurance X Not necessarily where risks are located X May differ to what is reported to

local regulator ( dependent on local requirements).

Accident & Health 4.5

0 5 10 15 20 25 30 35

: 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

© Lloyd’s 6



NDIX

-ECONOMIC & BUSINESS ENVIRONMENT DATA

: IMF (www.imf.org/external/data.htm), World Bank (http://data.worldbank.org/), IHS Global Insight.

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 inountry and therefore potential demand. To calculate this, GDP is converted from local currency to an international $ currency using PPP exchange rates rather than theexchange rate. The PPP local currency-to-international $ exchange rates are determined such that a standard basket of goods has the same price in international $

n each country. This adjusts for the differing costs of goods across countries, when converted at market exchange rate s.

NCE MARKET DATA

: Reported data derived by Lloyd’s Market Intelligence team; original source is regulatory bodies, associations, third party information providers.

Data is reported in US$. For more information, see www.lloyds.com/comparecountries.

ge Rates Note: Where required, data has been converted to US$ using annual average exchange rates as per www.oanda.com.

S PREMIUM DATA

: Reported data derived by Lloyd’s; original source is Xchanging (data therefore contains only premiums processed by Xchanging).

Data is reported is US$, on a calendar year basis and is signed gross premiums. This differs from the data published in the Lloyd’s Annual Report, which is also on aar year basis, but is written gross premiums and sourced directly f rom Syndicates. Differences are therefore (1) timing inconsistencies between signed and written grossms; (2) inconsistent use of exchange rates by Syndicates and Xchanging; & (3) incompleteness of Xchanging data set for certain classes of business (a substantialt of premium is not processed by Xchanging and missing from the REG 258 data set; this comprises, for example, UK Motor).

ge Rates Note: Data has been converted to US$ using monthly exchange rates provided by Xchanging.

ions:

ss Signed Premiums: Original and additional inward premiums, plus any amount in respect of administration fees or policy expenses remitted with a premium butre the deduction of outward reinsurance premiums.

ndar 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 ofunt, which is determined by the inception date of each risk.

ntry 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 / reinsurancenates, & is irrespective of the country to which the risk is classified for regulatory reporting purposes.

mple: 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 reportingoses. 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 2008so be allocated to the 2008 “processing year”.

ESSING THE DATA: to access the raw data in this document, and equivalent data for other countries, see www.lloyds.com/comparecountries.

LAIMER: 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 notpt 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 at of, but not limited to, any statement, fact, figure, expression of opinion or belief contained in this document.

© Lloyd’s 7

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