S&P affirms ratings on Saudi Arabia; outlook stable

S&P Global Ratings has affirmed its long-term issuer credit and insurer financial strength ratings for Saudi Re, a Saudi Arabian reinsurer, while upgrading its outlook to "positive" from "stable". The agency cited improved performance metrics, including the company's strengthened competitive position and robust capital buffers. Saudi Re's ratings include an 'A-' long-term issuer credit rating, 'gcAAA' Gulf Cooperation Council regional scale rating, and 'A-' insurer financial strength rating, all of which remain unchanged.

The positive outlook reflects S&P's expectation that Saudi Re will continue to benefit from favorable regulatory developments in Saudi Arabia's insurance market, particularly the mandatory cession policy. This policy requires domestic insurers to cede a growing percentage of reinsurance treaties to local markets—30% in 2025—and is expected to drive further revenue growth. Saudi Re reported an 80% revenue increase in 2024 and 45% growth in the first nine months of 2025, with projections of 35%-40% annual growth over the next two years.

The company's disciplined underwriting practices and conservative investment strategy, focused on high-quality fixed-income assets, have supported its financial resilience. Its risk-based capital adequacy remains strong, with a capital base of SAR 2.1 billion as of September 2025, nearly double the level in late 2023. Strategic transactions, including the sale of its stake in Probitas Holdings and a 23.08% investment by Saudi's Public Investment Fund, have further bolstered its capital position.

While S&P noted potential risks related to market concentration, the positive outlook indicates room for rating upgrades if Saudi Re sustains its underwriting discipline and capital strength.