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INSURANCESaudi Re, followed by MEDGULF, had the highest daily trading volumes in 2007-08.Exhibit 110: Average daily trading volume of stocks (‘000s) , Jan 2007 – Dec 20082,0001,5001,0005001,8061,8221,3771,104949 925 937 941781608 574 639 759 760 778 825 8986195082952020NCCIMalathMedgulfAllianz SFSALAMAWalaaArabian ShieldSABB TakafulSanad Ins.SAICOSaudi Indian Co.Gulf UnionATCAl-AhliaACIGAICCTrade UnionAl-SagrUCASaudi ReBupa ArabiaSource: BloombergKSA’s insurance industry is at an incipient stage and offers scope for exponential growth, goingforward. The sector is estimated to benefit largely from increasing liberalization, growingpopulation, and increasing awareness of insurance products.Although long term drivers arepositive, we hold a negativeoutlook on the sector in theshort termHowever, in the near term, a slowdown in business activities will have a negative impact ondemand for non-life insurance. As many companies are listed recently and are at a nascentstage of development, they are expected to incur higher selling and general administrationcosts, which would put pressure on their net income in 2009. In addition, unit-linked lifeinsurance products have lost their charm due to the plunging equity markets, which, in turn, isimpacting the overall growth of the insurance sector. Insurance companies are likely toexperience erosion in their capital values, as they will record mark-to-market losses on theirinvestment portfolio. Hence, we remain cautious on the earnings prospects of insurancecompanies in 2009, and thus hold a negative outlook on this sector in the near-term.JUNE 2009SAUDI ARABIA FACTBOOK73