ASSESSING PROFITABILITY AND GROWTH OF INSURANCE SECTOR IN SAUDI ARABIA: USING FINANCIALS AND TANGIBLES

Abstract

The purpose: The purpose of this study to find out the contribution of internal (financial) and external (tangible & human resource) factors of growth and development of the Saudi insurance sector and facilitate suggestions. Methodology: The study considers financial data of insurance companies of Saudi Arabia for the period 2013 to 2017for internal analysis while data from 2010 to 2015 for external analysis. Trend indices (chain based index numbers & fixed base index numbers) from financial statements and insurance establishments and human resources of the insurance industry are prepared to know the internal and external factors responsible for growth and development. The averages of trend indices are obtained to get the results of the analysis. Findings: The study finds that there is negativity in operational efficiency. It also finds that the internal liabilities or shareholders’ equities are decreasing continuously. Also, establishments engaged in insurance activities are not enough to cover all prospective customers. Implications: The finding implies that the increase in revenues is not enough. The findings also imply a weak long term paying ability towards this the study recommends further investment in profitable options like securities and avoid excess liquidity and increase insurance penetration. Novelty: This study is one of the few that assesses the performance of the insurance sector of Saudi Arabia. In the process, it performs internal analysis using operational and financial factors; and an external analysis using tangibles and intangibles.