(MENAFN - Arab News) RIYADH, 17 May 2007 — Insurance is the fastest growing sector in the Kingdom, observed Prince Mohammed ibn Bandar ibn Abdul Aziz, chairman of Al-Ahliah Cooperative Insurance Company, at a press conference held to announce his company's initial public offering (IPO) which is set to commence on Saturday for a period of 10 days.
The company has mandated BMG Financial Advisors to act as financial advisor for the 40 percent offering of its shares to public and has assigned National Commercial Bank as the lead bank for the IPO.
Prince Mohammed said that insurance industry in the Kingdom is important to Saudi economy, and its volume is expected to reach SR20 billion in the next five years, especially after health insurance became mandatory in addition to the compulsory liability auto insurance.
"The company intends to offer SR40 million, or 40 percent of its capital to the public, " the prince said, pointing out that a total of four million shares at SR10 per share will be distributed to the public through this IPO. He added that his company has a decade of experience in the Kingdom and holds a strategic partnership with the Egyptian National Insurance Company which has more than 100 years of experience in the field. Noting that the company has a portfolio capital of SR200 million, the prince said investors' contributions to the company's stock will be utilized to reap rich dividends.
The prince said that his company intends to come out with new packages for the benefit of individual and corporate customers. He said that his company has deployed a special panel to ensure that the company's products and services are Shariah-compliant. He also encouraged other insurance companies to team up to offer the best services required for the nation. The prince said that since the concept of insurance in the Kingdom is new, therefore it will grow steadily in the course of time.
Basil Al-Ghalayini, chief executive officer (CEO) of BMG Financial advisors, told Arab News that the entry of the new insurance companies to Tadawul is a healthy sign for the growth of the Saudi stock market. "Two companies have been already listed and there will be 11 more coming into the market by the end of summer," Ghalayini said, adding that although the contribution of the insurance companies to Tadawul is small, it will gradually stabilize the market in the long run.
BMG has played the role of financial advisor and IPO arranger for six insurance companies, MEDGULF, Al-Ahliah insurance, Allied Cooperative Insurance Group (ACIG), and Saudi Arabian Insurance Company and extends its services to many other sectors such as, medical services, tourism, real estate, mining, and Islamic finance.
Last week, Capital Marketing Authority approved the IPO of seven new insurance companies, which will offer a total of 35.44 million shares from Saturday. They include Sanad for Cooperative Insurance and Reinsurance, (which has a capital of SR200 million), Saudi Arabian Cooperative Insurance Company (SR100 million), Saudi-Indian Cooperative Insurance (SR100 million), Gulf Union Cooperative Insurance Company (SR220 million), Al-Ahli Takaful (SR100 million), Al-Ahliah Cooperative Insurance (SR100 million) and Allied Cooperative Insurance Group (SR100 million).