Saudi Insurers Profits Fall 40% In H1 2025

The fall was driven by weak pricing in key business lines, reduced investment income, and growing cost pressures across the industry.

The report said profitability was undermined by losses in the dominant motor third-party liability (TPL) and medical insurance segments, where aggressive competition has prevented insurers from raising prices sufficiently to offset rising claims.

Many smaller and mid-sized insurers, operating with limited capital buffers, were particularly affected by the market’s sustained price weakness and by higher technology and regulatory compliance costs.

Aggregate industry profit fell to SAR1.3 billion (US$345 million), with 72 per cent of insurers posting weaker results. The average combined operating ratio, which measures costs and claims as a share of premiums, worsened to 96 per cent from 94 per cent a year earlier.

Larger insurers, however, demonstrated greater resilience. The top five companies saw their net profit fall by just 14 per cent year-on-year, compared to an average decline of 152 per cent among the rest of the market. This performance gap highlights the advantages of scale and diversification for well-capitalised firms, Moody’s said.

Investment income, which accounted for nearly all of insurers’ net profit in both 2024 and H1 2025, dropped by 11 per cent in the first half of the year, compounding the pressure on overall earnings.

Despite the profitability slump, Moody’s noted that Saudi Arabia’s economic expansion continues to support long-term insurance growth. The sector’s revenue increase reflects solid demand driven by economic diversification under Vision 2030, new compulsory insurance requirements, and low overall insurance penetration.

Looking ahead, consolidation is expected to accelerate as regulators raise capital standards and increase scrutiny of underperforming firms. The Insurance Authority, which took over regulatory responsibilities in 2024, has already increased minimum capital requirements to SAR300 million and plans to introduce enhanced risk-based capital rules within the next few years.

Moody’s said the trend toward mergers and acquisitions will continue, improving stability in the fragmented Saudi market. Larger, better-capitalised insurers are expected to gain market share as smaller players struggle to remain profitable in an increasingly competitive and tightly regulated environment.