Saudi Arabian Monetary Authority - SAMA

1 Saudi Arabian Monetary Authority The General Department of insurance ControlThe Saudi insurance market Report 2016 The Saudi insurance market Report (2016)SAMA The General Department of insurance Control 1 Introduction4 insurance market Performance -Overall Gross Written Premiums 6 insurance Penetration7 insurance Density8 Gross Written Premiums by Line of Business9 Net Written Premiums by Line of Business11 Retention Ratio by Line of Business 13 Gross Claims Paid by Line of Business14 General and Health Net Earned Premiums vs. Net Claims Incurred 15 market Profitability16 Balance Sheet -Policyholders Assets17 Balance Sheet -Shareholders Assets18 Balance Sheet -Policyholders Liabilities and Equity19 Balance Sheet -Shareholders Liabilities and Equity20 insurance market Performance -By Line of Business Health Insurance22 Protection and Savings insurance 23 Motor insurance 24 Property/ Fire insurance 25 Table of ContentsThe Saudi insurance market Report (2016)SAMA The General Department of insurance Control 2 Table of Contents Engineering insurance 26 A&L and Other Insurance27 Marine insurance 28 Energy insurance 29 Aviation insurance 30 Other market Indicators Commissions Incurred by Line of Business32 Employees Breakdown by Nationality 33 insurance market Structure34 Capitalization of insurance Companies 35 Appendix: Data Tables Table 1.

2 Gross Written Premiums by Line of Business37 Tables 2 & 3: insurance Penetration and Density38 Table 4: Net Written Premiums by Line of Business39 Table 5: Retention Ratio by Line of Business40 Table 6: Commissions Incurred by Line of Business41 Table 7: Gross Claims Paid by Line of Business423 IntroductionThe Saudi insurance market Report (2016)SAMA The General Department of insurance Control 4 Introduction In2016,GrossWrittenPremiums(GWP) , , : HealthinsuranceGWP,whichrepresents51%oft heinsurancemarket, , GeneralinsuranceGWP,whichrepresents47%of theinsurancemarket, , Protection&savings(P&S)insuranceGWP,whic hrepresents3%oftheinsurancemarket, Totalnumberofinsurancepoliceswrittendecr easedto7,308,067policyin2016comparedto8, 123,647policyin2015 This report is based on the data collected from 34 insurance and reinsurance companies5 insurance market Performance -OverallThe Saudi insurance market Report (2016)SAMA The General Department of insurance Control 6 Gross Written PremiumsGross Written Premiums(2012 to 2016, SR Million)% Growth 2015 ,0001,05117,17318,630201536,94620141,036 18,96716,49411,28588930,48213,85715,7219 04201325,23911,50012,895845201221,17436, 855(1) The GWP is the total of accounted premiums.

3 There may be double counting of reinsurance premiums accepted from other Saudi Arabian insurers or reinsurersGeneralHealthP&S (1)in2016, ,whichrepresentsagrowthrateof1%. ,whileGeneralinsurance scontributiontototalbusinessvolumein2016 increasedto47%comparedto45%in2015. ProtectionandSavingsinsuranceremainedthe smallestlineofbusinessaccountingfor3%oft otalGWP, SR Million20122013201420152016SR (M)% TotalSR (M)% TotalSR (M)% TotalSR (M)% TotalSR (M)% TotalHealth11,28553%12,89551%15,72152%18 ,96752%18,63051%General9,00043%11,50046% 13,85745%16,49445%17,17347%Protection &Savings 8894%8453%9043%1,0363%1,0513%Total21,174 100%25,239100%30,482100%36,496100%36,855 100%2016 The Saudi insurance market Report (2016)SAMA The General Department of insurance Control 7 insurance Penetration InsurancepenetrationoftotalGrossDomestic Product(GDP)isdefinedasGrossWrittenPremi umsdividedbythetotalGDP Overthepastfiveyears,insurancepenetratio nhasincreasedatacompoundedannualgrowthra te(CAGR)of19% In2016, ,duetoadecreaseinGDPandslightlyincreasei nGWP.

4 Insurancepenetrationofnon-oilGDPisdefine dasGrossWrittenPremiumsdividedbynon-oilG DP In2016, Insurancepenetrationofnon-oilGDPhasincre asedatanaverageannualrateof7%between2012 and2016+7% Penetration of Non-Oil GDP(2)(2012 to 2016, % of Non-Oil GDP) (1) Total GDP of SR 2,727 SR 2,795 SR 2,821SR 2,449 and 2,398 Billion in 2012, 2013, 2014, 2015 and 2016, respectively, General Authority for Statistics (2) Non-oil GDP SR 1,353 SR 1,471 SR 1,601 SR 1,740 and 1,790 Billion in 2012, 2013, 2014, 2015 and 2016 respectively, General Authority for Statistics insurance Penetration of Total GDP(1)(2012 to 2016, % of Total GDP)% Growth 2015 Growth P&S InsuranceTotal Health InsuranceTotal General InsuranceTotal General InsuranceTotal P&S InsuranceTotal Health +19%20162016 The Saudi insurance market Report (2016)SAMA The General Department of insurance Control 8 insurance Density , ExpendituresperCapitaoninsuranceproducts haveincreasedbyanaverageannualrateof12%b etween2012and2016 ThedensityofProtectionandSavingsinsuranc eremainedlowinabsoluteterms,andrelativet oGeneralandHealthinsurance,atSR33perCapi ta387442511616586308394450536540+12%2015 118634201499129201386429201272530331159 insurance Density(1)(2012 to 2016, SR per Capita)(1) Saudi population of , , , and Million in 2012, 2013, 2014, 2015 and 2016, respectively, General Authority for Statistics % Growth 2015 % P&S InsuranceTotal Health InsuranceTotal General Insurance2016 The Saudi insurance market Report (2016)

5 SAMA The General Department of insurance Control 9 Motor and Health insurance accounted for around of total GWP in 2016 Health insurance , which includes both compulsory and non-compulsory lines of business, remained the largest line of business in 2016, accounting for 51% of total GWP Motor compulsory and non-compulsory lines of business stood in second place with a 33% share of total GWP Motor underwritten premiums recorded the highest growth rate in 2016at Written Premiums by Line of Business (1) A&L stands for Accidents and Liabilities insurance throughout the documentIn SR Million20122013201420152016 GrowthSR M% TotalSR M% TotalSR M% TotalSR M% TotalSR M% Total% , , and , , , , , , , Fire1, , , , , , , , , , , , , , ,63051% ,174100%25,239100%30,482100%36,496100%36 ,855100% Saudi insurance market Report (2016)SAMA The General Department of insurance Control 10 Gross Written Premiums by Line of Business (continued)11,28512,89515,72018,96718,63 04,6896,3558,02610,79912,1581,6651,8261, 9621,92384569163445856344345638514014714 067743+15%20161,0511,05036,855908201236, 4961,0361,0931,204726201430,4829041,0791 ,43481125,2399411,2007401443042015201321 ,1741,3488891,077 HealthMotorProperty/ FireP&SA&L and OtherEngineeringMarineEnergyAviationGros s Written Premiums by Line of Business (2012 to 2016, SR Million)The Saudi insurance market Report (2016)

6 SAMA The General Department of insurance Control 11 NetWrittenPremiums(NWP)isdefinedasthepre miumsretainedbytheinsurancecompany,after thesubtractionofthepremiumscededtolocalo rinternationalreinsurersfromGWPbylineofb usiness ,respectivelyin2016 , Healthinsuranceremainedthelargestlineofb usinessaccountingfor59%oftotalNWP Motorinsurance sshareoftotalNWPremainedinsecondplace,an dMotorinsuranceaccountedfor35%ofNWPin201 6 Net Written Premiums by Line of Business In SR Million20122013201420152016 GrowthSR M% TotalSR M% TotalSR M% TotalSR M% TotalSR M% Total% and , , , , ,72035% , , , , ,09559% ,064100%19,243100%24,334100%30,275100%30 , Saudi insurance market Report (2016)SAMA The General Department of insurance Control 12 Net Written Premiums by Line of Business (continued)9,95111,45614,65518,1894,4085 ,9677,6029,91218,09510,72076733031628220 327321720518021420147305642013+18%19,243 2015714391201216,06430,27582152532916620 1630,84783652724,334 Net Written Premiums by Line of Business (2012 to 2016, SR Million)HealthMotorP&SA&L and OtherProperty/ FireEngineeringMarineAviationEnergyThe Saudi insurance market Report (2016)SAMA The General Department of insurance Control 13 Retention Ratio by Line of Business Theoverallretentionratioofinsurancecompa niesintheSaudimarketincreasedslightlyto8 4%in2016,upfrom83% ,theretentionratiosforMotorandHealthinsu rancewere88%and97%,respectively Theweightedaverageretentionratioofotheri nsurancelinesofbusiness( ,excludingMotorandHealthinsurance)increa sedto33%in2016comparedto32%in2015 Notes.

7 -Alllicensedcompaniesarerequiredtoadhere toaminimumretentionratioof30%ofitstotali nsurancepremiums(asperArticle40oftheImpl ementingRegulations)-Retentionratiosaren otshownforProtection& Fire6%Aviation52%Energy84%92%88%33%Motor 48%34%50%A&L & Other31%18%30%Marine95%Health16%96%97%14 %17%93%Retention Ratios by Line of Business(2014 to 2016, % of GWP)201520142016 Weighted average excluding Motor and Health insuranceWeighted average including all lines of businessThe Saudi insurance market Report (2016)SAMA The General Department of insurance Control 14 Totalgrossclaimspaidincreasedby6% In2016,HealthandMotorgrossclaimspaidgrew by11%and20%,respectivelycomparedto2015fi gures In2016,Aviationinsurancerecordedthehighe stgrowthrateingrossclaimspaid, Table7intheappendixcontainsallthegrosscl aimsdatabylineofbusinessfrom2012to2016 Gross Claims Paid by Line of BusinessGross Claims Paid by Line of Business(2012 to 2016, SR Million)8,51110,40511,56713,10614,5483,4 654,7206,0697,5559,0592,3674203903582617 1891513,615+18%201626,0171,034201524,518 631201420,314329201316,9962971182012% Growth 2015-2016 TotalHealthMotorProperty/ FireP&SEngineeringMarineA&L and OtherAviationEnergy6%0%81%20%22%-43%8%-5 6%20%11%The Saudi insurance market Report (2016)SAMA The General Department of insurance Control 15 General and Health Net Earned Premiums vs.

8 Net Claims IncurredNet Earned Premiums Vs. Net Claims Incurred(2012 to 2016, SR Million) NetEarnedPremiums(NEP)isequaltoNWPminust hechangeinnetunearnedpremiumsreserve Theinsurancemarket , ,whichrepresents13%increase GeneralandHealthNetClaimsIncurred(NCI), ,thetotalofnetclaimspaidplusthechangeino utstandingandIBNR claimsreserve,increasedby10% For2016 GeneralandHealthnetclaimsratio, ,thelossratio,whichisequaltoNCIdividedby NEP,decreasedtoreach77% ,20226,79421,33717,14614,07723,41621,295 17,38615,93110,926+10%+13%20152014201320 12 NCINEPLoss Ratio(% NEP)77% % % Saudi insurance market Report (2016)SAMA The General Department of insurance Control 16810-99632,1042782,117 Investment ResultNet ResultUnderwriting Result20152016 insurance market Profitability(2015-2016, SR Million) insurance market ROA/ ROE(2016, % of Net Result to Assets/ Equity) Insuranceunderwritingresultistheoutcomeo fsubtractingallinsurancerelatedexpensesf rominsurancerevenues Thenetresultisequaltothesumofrevenuesmin usthesumofexpenses Investmentincomeisthetotalinvestmentinco meminustotalinvestmentexpense In2016,theinsuranceunderwritingresulttot aledSR2,117 Million,comparedto963 Millionin2015 InvestmentincomeincreasedaffectedlytoSR2 78 Millionin2016,comparedtoadecreaseofSR9 Millionin2015 Theinsurancemarket snetresulttotaled2,104 Millionin2016,comparedtoSR810 Millionin2015 ReturnonAssets(ROA) ,insurancemarket ReturnonEquity(ROE) ,Insurancemarket Profitability2016 The Saudi insurance market Report (2016)SAMA The General Department of insurance Control 17 Balance Sheet -Policyholders Assets Investmentsaccountedforthebiggestshareof policyholders assets, Policyholders (operational) Assets(2016, SR Thousand)

9 * Other investments consists mainly of investments in funds related to saving productsItem NameGeneral and Health InsuranceProtection and Saving InsuranceTotal Insurance201620152016201520162015 Cash and cash equivalents6,125,8335,458,353192,519166, 4396,318,3525,624,792 Receivables, net8,293,4638,571,976179,674141,7488,473 ,1378,713,723 Reinsurance recoverable8,223,6318,655,539359,534336, 3988,583,1658,991,937 Deferred policy acquisition cost923,6141,037,1633,2333,792926,8461,0 40,955 Prepaid expenses758,800984,9401,1921,453759,9929 86,393 Investments10,897,3319,368,7532,863,6942 ,872,17313,761,02512,240,926 Deposits at financial institutions8,564,7447,633,92060,33883,9 778,625,0827,717,897 Loans139,520---139,520-Debt securities and fixed income1,879,4101,323,376--1,879,4101,323 ,376 Shares (common, preferred)160,18097,07624,018-184,19897, 076 Real estate9,8619,861--9,8619,861 Investment in subsidiaries and affiliates --69,95337,10569,95337,105 Other 143,617304,5212,709,3852,751,0912,853,00 13,055,612 Tangible assets476,749480,5666,7828,006483,531488 ,572 Intangible assets18,62017,946-10318,62018,049 Other policyholders assets1,431,5871,348,78863,227(11,339)1, 494,8141,337,449 Total policyholders assets37,149,62635,924,0253,669,8553,518 ,77140,819,48139,442,796 The Saudi insurance market Report (2016)SAMA The General Department of insurance Control 18 Balance Sheet -Shareholders Assets Attheendof2016,insurancecompanies Investmentsaccountedforthebiggestshareof shareholders assets, Shareholders Insurancecompanies Assets(2016, SR Thousand)

10 Item NameGeneral and Health InsuranceProtection and Saving InsuranceTotal Insurance20162015 Cash and cash equivalents3,160,2982,343,990 Receivables, net29,4808,989 Investments10,782,58610,859,315 Deposits at financial institutions6,187,4586,447,954 Loans291,1421,923 Debt securities and fixed income2,584,7402,222,241 Shares (common, preferred)737,7951,006,884 Real estate57,07925,000 Investment in subsidiaries and affili