Evaluation of the Financial Performance of Reinsurance Companies Using Financial Ratios: A Case Study of the Saudi Reinsurance Cooperative Company "Saudi Re" (2013–2022)

Reinsurance companies play a crucial role in the financial industry by supporting insurance operations and facilitating effective risk distribution. This study aims to evaluate the financial performance of reinsurance companies in Saudi Arabia, with a specific focus on the Saudi Reinsurance Cooperative Company "Saudi Re" — the only reinsurance firm operating in the Kingdom. The evaluation spans the period from 2013 to 2022 and employs a range of financial analysis tools to assess the company’s financial stability, strength, and ability to meet its obligations to primary insurers.
A variety of financial indicators were used, including return on assets (ROA), profitability ratios, liquidity ratios, solvency and leverage ratios, operational efficiency, retention rates, and underwriting risks. The analysis revealed that financial leverage, liquidity, operational efficiency, solvency, and ROA significantly and positively impact financial performance. In contrast, retention rates and underwriting risks were found to have an insignificant effect.
The study recommends that reinsurance companies adopt financial ratios as essential tools for performance evaluation to ensure transparency and accuracy. It also highlights the importance of enhancing financial leverage and ROA to improve overall performance. Furthermore, introducing additional performance indicators could refine the analytical model, providing a more comprehensive assessment of reinsurance firms’ financial health.
These findings offer valuable insights into the financial dynamics of the reinsurance sector in Saudi Arabia and contribute to understanding how key financial factors influence the stability and growth of such firms in a unique and evolving market.