Principles to be applied to the regulation of branches of foreign insurance companies established in Saudi Arabia

Balance sheets and profit and loss accounts of the company for each of the last five financial years. 6. In deciding whether to authorize a branch of a foreign insurance company in Saudi Arabia, SAMA will pay close regard to the company's activities elsewhere and how these activities are regulated. SAMA may consider reports produced by the IMF/World Bank, such as their Financial Sector Assessment Program (FSAP) for any particular territory. If the applicant is not regulated elsewhere (e.g. some countries do not regulate reinsurance firms) or if the applicant is regulated in a jurisdiction not substantially compliant with IAIS Core Principles or FATF standards, then the application can only be considered after exhaustive enquiries into the firm’s shareholders, management structure and financial position. SAMA will need an assurance that it may exchange and share relevant supervisory information with the home supervisory authority. 7. Where a foreign insurance company operates an insurance branch in Saudi Arabia, a minimum of 10% of the net surplus arising from the business written in Saudi Arabia must be distributed to the policyholders directly, or in the form of reduction in premiums for the next year. 8. Where a foreign insurance company operates an insurance branch in Saudi Arabia, 20% of the net shareholders’ income in respect of the branch, determined in accordance with Article 70 of the Implementing Regulations, shall be set aside to increase the excess assets of the branch in respect of the business written in Saudi Arabia until the excess assets amount to SR 200m for an insurer and SR 400m for a reinsurer. When assessing the net assets in Saudi Arabia in respect of the business written in Saudi Arabia for the purpose of meeting this requirement, the technical provisions, asset values and admissibility of assets will be determined in accordance with the Implementing Regulations in respect of the business written in Saudi Arabia. The assets of the Saudi Arabian branch should not be used to cover solvency requirements of business written outside Saudi Arabia as in paragraph 2.5 above. 9. Where a foreign insurance company operates an insurance branch in Saudi Arabia, it shall invest its assets matching its liabilities (including technical provisions) in respect of business written in Saudi Arabia in accordance with Articles 59 to 63 of the Implementing Regulations. 10. Where a foreign insurance company operates an insurance branch in Saudi Arabia, it shall comply with Article 40 of the Implementing Regulations in respect of its reinsurance arrangements in respect of business written in Saudi Arabia. 11. The SAMA fee of 0.5% of total underwritten premiums under Article 36 of the Implementing Regulations will be levied only in respect of business written in the Saudi Arabian branch.