PIF completes investment in Saudi Re

Logo of Public Investment Fund (PIF)

The Public Investment Fund (PIF) announced today, Jan. 13, that it has acquired a 23.08% stake in Saudi Reinsurance Co. (Saudi Re) by way of a capital increase and subscription to new shares, with the suspension of preemptive rights in accordance with Capital Market Authority (CMA) regulations.

In an emailed statement to Argaam, the fund said that its capital investment aims to enhance Saudi Re’s growth potential by adding to its financial capacity and further strengthening its credit rating.

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The sovereign wealth fund’s capital investment also supports Saudi insurance firms by enabling Saudi Re to deliver high-quality reinsurance, permitting Saudi insurance companies to manage risk more effectively. Insurers use reinsurance to provide adequate coverage to their policyholders and reduce earnings volatility. Saudi Re enables Saudi insurance firms to grow and innovate.

The investment is expected to contribute to more reinsurance premiums staying within Saudi Arabia while also growing the local reinsurance sector, and allowing better coverage for commercial activities for both insurance firms and companies in general, making the economy as a whole more financially resilient. A better capitalized Saudi Re will be more able to meet rapid growth in demand, and devise new products, while having increased capacity to expand in domestic and global markets.

Sultan Alsheikh, Head of Financial Institutions in MENA Investments at PIF, said: “By investing in Saudi Re, PIF is reinforcing a leading regional reinsurer and strengthening Saudi Arabia’s insurance sector, which is an essential component of sustainable economic growth.”

This enhances access to quality financial services for insurers and their policyholders, and strengthens the sector, he added.

The transaction secured regulatory consents and was approved by Saudi Re’s shareholders at an extraordinary general meeting.

According to Argaam data, Saudi Re offered 26.73 million shares, while suspending the preemptive rights. The insurer will increase its capital from SAR 891 million to SAR 1.15 billion. The PIF agreed to fully subscribe to the new shares, bringing its ownership in the company to 23.08% after the capital hike.