(Refiles to fix typo in Bupa Insurance in last paragraph)
DUBAI, June 18 (Reuters) - MetLife AIG ANB Cooperative Insurance Co said on Tuesday it had signed a non-binding memorandum of understanding with bigger rival Walaa Cooperative Insurance Co to evaluate a potential merger between the two companies.
Metlife AIG ANB said it has appointed Saudi Kuwaiti Finance House as its financial adviser for the proposed merger in a deal that is likely to be based on a share swap.
Saudi Arabia’s crowded insurance sector is ripe for consolidation after the central bank proposed more stringent risk-based capital requirements to bolster the insurance sector.
The Saudi insurance sector is concentrated in health and automotive, which accounted for more than 80% of gross written premiums in 2017.
Bupa Arabia, Tawuniya and Med Gulf dominate the health market, accounting for 80% of premiums in 2017, while the other 24 companies, with a combined market share of only 20%, lack scale, which may lead to consolidation, Fitch Ratings said in a recent report. (Reporting by Saeed Azhar. Editing by Jane Merriman)