Saudi Arabia’s Chubb Cooperative Insurance has entered into discussions to study the possibility of a merger with Al Ahli Takaful, the company said in a stock exchange filing on Wednesday (Feb 19).
If a merger is agreed, the two insurers will sign a non-binding memorandum of understanding to evaluate a potential merger, said Chubb Arabia.
Saudi Arabia’s insurance sector faces new enhanced capital requirements, which is a driving factor for consolidation among Islamic insurers.
Credit rating agency S&P said in July last year that while the Islamic insurance sector is “poised for consolidation, merger activity could also sweep through the sector at large”.
Most recently. Walaa Cooperative Insurance in September signed a binding merger deal to acquire all stakes held by shareholders of MetLife AIG ANB Cooperative Insurance through a share swap deal without any cash consideration.
Saudi Arabia is home to the Gulf Cooperation Council’s largest Islamic insurance market.
There are 33 insurance and reinsurance companies licensed to operate in Saudi Arabia, according to data from SAMA.
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