The Saudi insurance sector is poised for consolidation as Buruj Cooperative Insurance Co. and the Mediterranean and Gulf Insurance and Reinsurance Co. (Med Gulf) have signed a non-binding memorandum of understanding (MoU) to explore a potential merger. According to a Tadawul filing, the MoU aims to establish a framework for the strategic transaction through a share exchange offer. 

The proposed merger will involve increasing Med Gulf’s capital and issuing new shares to Buruj shareholders based on a mutually agreed exchange ratio. This development aligns with the government’s Vision 2030 plan to strengthen the insurance sector, diversify the economy, and enhance financial stability. 

According to Global Data, a UK-based consultancy firm, Saudi Arabia’s insurance industry is expected to achieve a compound annual growth rate of 5.2 percent, reaching SR83.7 billion ($22.3 billion) by 2028, up from SR68.3 billion in 2024. This growth will be largely driven by the health and motor segments, which are projected to constitute 86 percent of the overall gross written premiums. 

Should the transaction proceed, Med Gulf will act as the acquiring company, with Buruj being the acquired entity. Buruj will announce its financial adviser for the transaction in due course, while Med Gulf has appointed HSBC Saudi Arabia as its financial adviser and Khoshaim & Associates as its legal advisor. Both companies will conduct comprehensive financial, tax, legal, and actuarial reviews to discuss the merger terms. 

Buruj has stated that it will continue its regular business operations until the merger is finalized, ensuring compliance with legal requirements by announcing any major developments as necessary.