The Insurance Authority (IA) has published the review of the actuarial report on solvency and capital. The IA states that: The year 2025 marks the sixth consecutive cycle of actuarial reports submitted by insurance companies under the Actuarial Work Rules (AWR) issued in March 2020. The AWR aim to enhance the role and responsibilities of actuaries in the insurance sector in order to facilitate informed decision-making by management and to provide greater technical support to the business as the market sophistication continues to grow in the Kingdom
Under these Rules, the Appointed Actuary is obligated to perform a number of actuarial analyses, at least, annually, and convey to the Executive Management, Board of Directors and the Insurance Authority (IA) the outcome of those analyses in the form of an actuarial report, prepared separately on each individual topic.
The rules also require the Appointed Actuary to investigate and advise the Company on its solvency position and identify all major risks using appropriate actuarial techniques. To support this requirement, a Stress & Scenario Test (SST) framework was introduced in 2020. Since then, the framework has expanded significantly in scope and sophistication each year, with the objective of facilitating a measured transition towards a Risk-Based Capital (RBC) regime, which is now due to come into effect from 1 January 2027.
The report encompasses IA’s observations from its review of the Solvency & Capital Report 2025, to provide companies with early insight into the potential impact of moving to the RBC-based solvency framework and highlights each insurer’s susceptibility to various risks. The document concludes with a dedicated section outlining the IA’s expectations to the Board of Directors, Executive Management, the Appointed Actuary, and Head of Actuarial Function.
The report contains the below sections:
1. Current Capital Requirement v Risk-Based Capital.
2. Composition of Risk-Based Capital.
3. Capital Drivers within Individual Risk Modules.
4. RBC Breakdown by Risk Exposure Type.
5. Overall RBC Expressed as a Percentage of Different Exposure Measures.
6. Top Risks for Insurance Companies.
7. Diversification Benefit within Risk Types.
8. Actuarial Function’s Contribution.
9. Insurance Authority Expectations.
On 28 October 2025, the IA announced that the RBC framework will become the new solvency assessment regime for insurance and reinsurance companies operating in Saudi Arabia, fully replacing the current solvency regime effective 1 January 2027.
Through multiple iterations since 2020 (including four dry runs already conducted, fifth dry run coming up soon based on the results of year 2025, to be followed by quarterly parallel runs during 2026), management of insurance companies have been provided with ample opportunity to understand the link between business strategy and risk-based capital requirements, with the expectation that each insurance company will actively work towards embedding a culture of risk-based decision-making in its day-to-day operations and in setting its strategic targets.
In this regard, the Authority summarizes a number of important observations emerged from its review and shares these observations with the Company’s executive management, along with the expectations in respect of those observations. The IA anticipates that management will consider each of those observations and IA expectations diligently, internal discussions will be held at the Board of Directors’ level and with all relevant functions, and appropriate actions will be taken by management.