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RIYADH: The Gulf Cooperation Council’s Islamic insurance sector is set to maintain around 10 percent annual growth in 2025 and 2026, buoyed by population expansion, infrastructure spending, and regulatory reforms, according to S&P Global Ratings. 

��������, the region’s largest Islamic insurance market, will continue to drive growth as Vision 2030 megaprojects fuel demand for coverage, S&P said in its latest white paper. 

Islamic insurance, or Takaful, has expanded rapidly across the GCC in recent years, logging 24 percent to 28 percent growth in 2022 and 2023. Strong government backing, mandatory health insurance regulations, and a rising awareness of Sharia-compliant financial products have supported the sector’s expansion. 

“Islamic and Takaful insurers in the GCC region continue to benefit from favorable growth prospects, and we therefore expect 2025 to be another year with solid top-line growth,” S&P said. 

However, the agency cautioned that “heightened competition in motor and medical lines, primarily in ��������, the largest Islamic insurance market in the region, will likely weigh on overall earnings in 2025.” 

The sector posted record earnings in 2024, with aggregate net profit rising to about $1.1 billion, up from $940 million in 2023. Saudi insurers led the surge, generating around $960 million last year versus $853 million a year earlier, while earnings in other GCC markets climbed to over $120 million from $87 million. 

In 2024, insurers in the GCC region excluding �������� recorded 13 percent revenue growth, while the Kingdom experienced a 14 percent expansion. 

S&P said that net earnings for the sector in the first half of 2025 fell 35 percent year on year, citing a 40 percent drop in profits in the Saudi market and weaker earnings in other regional markets. 

This is mainly attributed to “heightened competition in motor and medical lines, as well as a decline in investment returns,” it added. 

Strong credit ratings 

According to S&P, credit ratings for Islamic insurers in the GCC will remain largely stable over the next 12 months, as most players are well capitalized. 

The report added that total shareholder equity in the sector rose to approximately $8.5 billion in 2024, up from $7.5 billion in 2023, supported by strong earnings and capital injections. 

S&P Global Ratings projects that overall credit conditions for Islamic insurers will remain relatively stable over the next 12 months. However, it said that “some loss-making players will continue to face challenges relating to solvency and other regulatory demands,” which could prompt them to pursue mergers and acquisitions or raise capital to meet their needs. 

In June, Fitch Ratings echoed similar views, saying that mergers and acquisitions are set to accelerate in ��������’s insurance industry as many firms struggle to meet new capital requirements or remain profitable amid intense competition and rising costs. 

Fitch also noted that several smaller insurers are already in discussions with larger rivals to strengthen their capital positions and ensure long-term survival. 

“Consolidation is particularly evident among smaller and midsize players in �������� and the UAE, as economies of scale become more important,” S&P said in its latest report, adding that thin capital buffers and rising regulatory and solvency requirements will continue to drive consolidation in the sector. 

Potential challenges 

S&P warned that a flare-up in the conflict between Israel and Iran, along with any regional escalation, could negatively affect business sentiment across the Middle East, including the GCC, and pressure insurers’ earnings. 

Although global tariff disputes have so far had minimal impact on GCC economies and insurers, S&P cautioned that ongoing volatility in capital markets could weigh heavily on earnings if trade tensions escalate. 

JEDDAH: Saudi entrepreneurs and innovators in the industrial and mining sectors are set to gain support through a new partnership aimed at driving development, creativity, and digital transformation.

The Ministry of Industry and Mineral Resources signed a cooperation agreement with the Saudi Innovation Club to implement joint programs and initiatives as part of efforts to empower national talent in the two sectors, the ministry said in a statement on Aug. 21.

The agreement, signed under the patronage of Assistant Minister for Planning and Development Abdullah Al-Ahmari, aims to foster new developments and create opportunities for pioneers. It was finalized during a ministry meeting under the ‘Innovative Industrial and Mining Products Program’ connecting inventors with service providers, incubators, and accelerators.

This initiative aligns with the ministry’s wider strategy to encourage advancement in industrial and mining activities, boost global competitiveness, and strengthen their role in diversifying the Kingdom’s economy.

It builds upon the Innovative Industrial and Mining Products Program, first unveiled in December, which focuses on accelerating sectoral progress and driving digital evolution within these industries.

“The agreement sets a joint framework for the two parties to organize activities and initiatives that foster a culture of innovation and showcase innovators’ success stories,” the statement said.

It added that the accord opens multiple avenues of collaboration, including sharing expertise, arranging business forums, conducting workshops, and launching initiatives to empower entrepreneurs and emerging talents.

The agreement was signed by Mohammed bin Saeed Al-Dughaim, general manager of the ministry’s innovation management department, and Majid bin Mohammed bin Anzan, chairman of the Saudi Innovation Club.

The ministry emphasized that this partnership underscores its commitment to advancing creative practices, raising public awareness, and creating a supportive environment for innovators in line with the Kingdom’s economic transformation goals.

According to the ministry, the Innovative Industrial and Mining Products Program represents “a key step toward fostering innovation in the industrial and mining sectors” and reflects its commitment to developing new solutions that “support the Kingdom’s industrial transformation and stimulate the growth and sustainability of the mining sector.”

Commenting on the program when first announced, Minister of Industry and Mineral Resources Bandar Alkhorayef said the program seeks to “provide an integrated environment that enables innovators to transform their ideas into executable and competitive products locally and internationally.”

He noted that the initiative will drive advancement — a cornerstone of economic growth — and advance digital transformation in the industrial and mining sectors, the minister stated in a post on his X handle at that time.