In consolidation mode

The year 2017 marked a new chapter in the Omani insurance sector. Powered by a higher capital base gained through IPO and mergers, the local players are now large enough to underwrite more risks and retain premiums within the country. An OER report

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Strengthening of capital base, listing of more national firms and mergers are expected to consolidate the insurance sector in the Sultanate. After strengthening capital base to RO10mn, at least four companies have floated shares on the Muscat bourse, while two mergers have reduced the number of players.

Four insurance firms – Al Ahlia Insurance Company, Vision Insurance, Oman Qatar Insurance and National Life and General Insurance – have already listed shares on the Muscat bourse. The public issue of Arabia Falcon Insurance, which was formed after a merger, is expected soon.

Insurance companies need a solid capital base to achieve sustainable growth and for retaining a major portion of the business within the country. With this aim, the Oman government in 2014 asked national insurance firms to float shares on the Muscat Securities Market (MSM) within three years, besides raising their minimum capital to RO10mn from RO5mn.

The regulations mark a new chapter in the Omani insurance sector, as local companies will be able to withstand competition by strengthening their financial, technical and human resources.

A higher capital base will make these institutions large enough to underwrite more risks and retain premiums within the country. This was also needed in view of the fact that Omani insurance firms are relatively small compared to their counterparts in other GCC states in terms of their business volume. Also, the listing of insurance firms would enhance transparency and disclosure.