Saudi Vision 2030 and the Insurance Sector

  • November 26, 2018

The insurance sector occupies a great position in the vision of 2030, because of its direct impact on a wide base of citizens and residents, in light of the government's directions to improve the level and quality of health services and to enhance competitiveness and transparency among service providers. "MUQAWIL" magazine conducted a press interview with the CEO of the company, about the contribution of the insurance sector to achieve the Saudi Vision 2030.

First, we would like to know more about Walaa Insurance Company and its products in the Saudi market?

We take pride in introducing ourselves as one of the leading insurance and reinsurance companies in the Kingdom of Saudi Arabia. Our vision is “To position ourselves as a first choice insurance company in the Saudi market providing all classes of Shariah-compliant products in all sectors and to all cross-sections of the society. Walaa was established as a Saudi Joint Stock company in 2007 with a Paid-up Capital of SAR 200m, and received its Walaa was established as a Saudi Joint Stock company in 2007 with a Paid-up Capital of SAR 200m, and received its operating license from SAMA as an ‘Insurance and Reinsurance Company’ in July 2008. Walaa issued Rights Share in June 2015, which increased the paid-up Capital to SAR 400m, which was followed by another increase in capital by way of bonus share issue, in May 2018 reaching SAR 440m, Walaa issued more bonus shares in May 2019, as a result of which its capital increased to 528m, Walaa also distributed dividends of SAR 44 million (SAR 1 per share) in the same year. Walaa successfully completed the first merger transaction in the Saudi insurance market with MetLife AIG ANB Cooperative Insurance (MAA), the transaction was completed by the end of Feb 2020. The net assets and business activities of MAA were transferred to Walaa in exchange for 11,839,706 newly issued ordinary shares of Walaa (0.65 new share for every share in MetLife AIG ANB); thus, the merged entity’s capital increased to SAR 646 million. Walaa’s vision for growth has not stopped here, as during Jan 2021, Walaa announced the Board's Recommendation to Increase the Capital by Offering Right Issue with a targeted additional amount to the existing paid-up capital of SAR 775m. Walaa’s focus on capital increase was always done in line with the planned increase in the risk-retention capacity, adding more value to its clients, long term returns to its shareholders, and maintaining its solvency margin. Walaa has always been focused on the financial stability in its operations, which is also being reflected in our financial credit rating by S&P and Moody’s. Walaa is the only insurance company in KSA to have A- rating of S&P Global, we are also maintaining A3 rating of Moody’s for the last 2 years. Walaa started its operations in 2009 and closed that year with a Gross Written Premium of SAR 142 million. Walaa has consistently increased its business book every passing year and has crossed the league of ‘Billion Riyal Insurer’ in KSA Insurance Market in 2016. Since 2016, Walaa is consistently writing more than a billion Riyal GWP with a significant profit. Currently, Walaa is the only composite insurance company in KSA licensed to sell Protection & Savings, Motor, Medical, and Property & Casualty insurance products as well as providing facultative reinsurance for both General and Life products, to local insurance companies and assisting SAMA vision of retaining more risk inside the Kingdom. We are now having 470 plus employees serving both corporate and individual clients through our 65 plus branches, 3 regional offices throughout the Kingdom (Head Office in Al Khobar), and digital channels. In addition, Focusing on operational excellence Walaa has the following ISO Certifications: 9001-Quality Management, 22301-Business Continuity, 27001-Information Security Management, 45001-Occupational Health& Safety. Walaa is also actively working on its Environmental, Social, and Corporate Governance (ESG) initiatives to have its footprint in Saudi and be able to build an institute that will last for the coming generations. Walaa’s management is well diversified and comprised of seasoned professionals. Our CEO, Mr. Johnson Varughese, is a Chartered Accountant with 30+ years of professional experience in lead-managerial roles in the region and has been with Walaa since 2007. Prior to assuming this role, he held the position of CFO for 5-years. Furthermore, he is currently serving on SAMA Advisory Committee, a member of the Insurance Executive Committee, and the Chairman of the Insurance Finance Sub-Committee. The CFO serves as a member and Secretary to the Insurance Finance Sub-Committee. The Appointed Actuary serves as subject matter expert on Insurance Protection & Savings Sub-Committee.

What is your view for the insurance industry in the Kingdom during the last five years, since the inauguration of the Saudi Vision 2030?

The insurance sector is part of vision 2030 in the following aspects of the vision:
1) Quality of life program (increase public participation in sports and athletic activities) – the insurance industry, with the help of regulators, is focusing on creating more awareness of the general public regarding healthcare, promoting and supporting individuals to maintain a healthy lifestyle.
2) Financial sector development program: (ensure the formation of an advanced capital market) – all insurance companies are listed and participate in the capital market growth. In addition, it opens doors for collaboration with Fintech companies that reflect on improving customer services and innovations. (Promote and enable financial planning - retirement, saving etc.) –Insurance companies offer protection and savings products, which support in improving the saving behavior within the new generation.
3) Housing program- insurance companies’ offer life insurance to banks on their offered housing mortgage products, which reduces the risk for banks and promotes the mortgage products. Furthermore, the Inherent defects insurance (IDI), provides building owners with a long-term warranty against material damage caused by structural defects, which helps consumers and developers to reduce their risk.
4) Fiscal balance program (diversify government revenues - increase revenues from fees without introducing taxes on income or wealth on citizens) – insurance companies pay fees to various government entities/regulators, and if the insurance industry grows, this will lead to more revenues to the government.
5) National transformation program
*(transform healthcare: ease access to health services, improve the quality and efficiency of healthcare services, and promote prevention against health risks) – Insurance companies provide a range of healthcare benefits that contributes positively towards achieving Vision 2030.
*(improve living standards and safety: enhance traffic safety) – motor insurance offers a no-claim discount of up to 60%, which encourages good driving habits, and in return, improves traffic safety.
6) Hajj and Umrah program – insurance companies are part of the Hajj and Umrah medical/travel insurance program offered alongside the visitor’s visa to improve the experience of visitors and ensure their health and wellbeing during their trip to Saudi.
7) Human capital development program–insurance companies work closely with local institutes and universities to provide insurance programs, which in return, will help in the development of local talents to join the industry and generate experienced insurance professionals who
will lead the future of this industry. On top of this, insurance companies have also developed in-house training programs to further enhance the skills and knowledge of local talents. Last but not least, exceptionally talented employees are also sent abroad for advanced courses and training.

The Kingdom aims to diversify its economy and strengthen its investment programs. How will the insurance sector contribute, in this aspect, from your point of view?

Insurance is built upon the idea of investing the excess policyholders’ and shareholder funds to generate returns. Protection and savings insurance specifically, as these are long term insurance policies, unlike general insurance policies, which predominately are 12 months policies. The whole ideology is based on investment and generating growth; this leads to the circulation of money through investment in development projects, stock exchanges, and government securities. This type of insurance helps the policyholders in accumulating long-term savings, getting access to professional fund managers to achieve long-term growth, and protecting them in the event of death or disability (God forbid).


Insurance awareness is a challenge in expanding the market; Do you think that the sector needs new regulations that help increase competition and achieve comparative advantages for companies?

The market still lacks awareness of the benefits generated by insurance, where some still see it as a compulsory product that is enforced by law. The insurance companies and the regulators are continually working together to find ways to communicate the insurance benefits and increase the overall awareness. The regulator is always supporting the industry to have a healthy competitive environment. The regulator is also a big supporter of mergers, which will help market consolidation, with fewer but financially stronger companies. New products are continually being reviewed and approved by the regulator to bring depth to the Kingdom insurance market.


What about the engineering line, please shed light on it and its impact on the Saudi market?

Walaa offers a variety of engineering products such as; Contractors All Risks (CAR), Erection All Risks (EAR), Machinery Breakdown (MBD), Electronic Equipment (EE), Contractors Plant & Machinery Insurance (CPM), and Deterioration of Stocks following Machinery Breakdown (DoS) to name few. These products are designed to augment the industrial growth in the Kingdom. Projects like Riyadh Metro, Neom, Red Sea resorts, Qiddiya, etc. are multi-billion dollar projects, all the projects are insured under engineering products like CAR and EAR. These policies give peace of mind to the developers, that, in case of any adversity, their investment will be safe and their losses will be compensated. As part of Walaa’s support for the industrial devolvement in Saudi, Walaa has signed an agreement with Modon to provide risk management advice and best insurance cover to all the companies having their industries in Modon.

What are your visions for the future of the insurance industry in its various sectors, and are there challenges that can be identified?

The industry is going to grow exponentially in the coming 10 years and likely to become one of the biggest pillars of the economy. Compared to banking, for example, the insurance industry is still in its infancy in the Kingdom, the market still did not reach its full potential, and companies have not yet reached full market penetration. Medical insurance will continue to grow with the increase in population and the kingdoms' privatization programs, Protection & Savings is still an untapped market that has a huge potential and, Property & Casualty will continue to prosper given more new projects are coming to KSA. The future of the insurance industry is bright in Saudi, especially with the overall growth in the economy from the industrialization and infrastructure projects that are in line with the Kingdom’s vision 2030.


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