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MarketScreener Homepage  >  Equities  >  Saudi Arabian Stock Exchange  >  Saudi Basic Industries Corporation    2010   SA0007879121

SAUDI BASIC INDUSTRIES CORPORATION

(2010)
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Exclusive: Saudi Aramco pursues war cover after attacks - sources

12/04/2019 | 12:55pm EST
FILE PHOTO: Workers are seen at the damaged site of Saudi Aramco oil facility in Khurais

Saudi Aramco is looking to buy insurance against war and terror attacks after a damaging drone and missile attack on some of its oil facilities in September, two sources told Reuters.

Aramco, the world's largest oil company, has been looking for cover from insurers including those based at Lloyd's of London and elsewhere in the London market, they added.

The firm is seeking cover for facilities in Saudi Arabia's Eastern Province, its oil heartland, where it suffered the September attacks, one of the sources said.

Aramco said in the prospectus of this month's planned listing that it did not insure against all risks and its cover may not protect it from terrorism or acts of war.

At the launch of the IPO, which could be the world's biggest and raise up to $25.6 billion, Aramco said that it did not expect the Sept. 14 attack to have a material impact on its finances and operations.

Aramco declined to comment.

Available insurance options range from cover against a terror attack or sabotage through to full coverage, which includes war or civil war, along with compensation for the cost of business interruption.

An initial loss estimate from the strikes on Aramco's plants was 2 billion riyals ($533 million), a third source said.

Aramco insures much of its property itself through a so-called captive insurer, Bermuda-based Stellar Insurance.

Although one of the sources said Aramco also has an "excess of loss" cover with international insurers for any property damage above $200 million, this does not cover war or terror attacks, or revenue losses due to business interruption.

Aramco, which said in October it had fully restored oil output after the September attacks on its facilities, did have war cover around five years ago, the source added.

'WAKING UP'

Companies have become nervous about attacks on their property in Saudi Arabia, the world’s top crude exporter, after the strikes which temporarily shut down 5.7 million barrels per day (bpd) of Aramco's output, more than 5% of global oil supply.

As well as Aramco, a Saudi petrochemical company is also looking for terror and war insurance in Eastern Province where the attacks took place, a fourth source said.

"We have received more enquiries," said Scott Bolton, director, crisis management at insurance broker Aon, adding that both domestic and international companies were checking whether they were covered for such attacks. Saudi Basic Industries Corp (SABIC), which Aramco agreed to buy in a $69.1 billion deal this year, already has war insurance, one of the sources said.

SABIC did not immediately respond to a request for comment, but said in its 2018 annual report that it "kept a close eye on emerging geopolitical interruption risks" and had added cyber insurance to its global insurance program.

Riyadh and Washington have blamed the September strikes on Iran, which denies involvement. The United States has sent troops to Saudi Arabia, which it says is aimed at deterring further attacks amid heightened regional tensions.

The cost of war and terror policies in Saudi Arabia has risen by "multiples" since the attacks, one of the sources said without giving more detail on pricing. Another added that companies in the region were "waking up" to the idea.

Aramco's captive insurer, Stellar, offers energy onshore and offshore property, general liability and associated business interruption cover, insurance ratings agency AM Best said.

AM Best confirmed Stellar's financial strength rating of A (excellent) with a stable outlook in October, adding that the insurer had indicated its property program had "no exposure" to the strikes.

The captive has a "diversified panel of financially strong reinsurers", AM Best said.

Global reinsurers Hannover Re, Munich Re and Swiss Re, which help insurers cover large risks, declined to comment, while Aon said it did not have "visibility" into whether Aramco was seeking insurance.

By Carolyn Cohn, Stephen Kalin and Marwa Rashad


© Reuters 2019
Stocks mentioned in the article
ChangeLast1st jan.
BEST INC. -1.33% 2.96 Delayed Quote.-46.76%
HANNOVER RÜCK SE -0.07% 138.9 Delayed Quote.-19.27%
LINE CORPORATION 0.19% 5380 End-of-day quote.0.56%
LONDON BRENT OIL -0.67% 47.34 Delayed Quote.-27.73%
MUENCHENER RUECKVERSICHERUNG AG -0.51% 235.1 Delayed Quote.-10.34%
SAUDI ARABIAN OIL COMPANY 0.56% 35.9 End-of-day quote.1.84%
SAUDI BASIC INDUSTRIES CORPORATION -0.82% 96.8 End-of-day quote.3.09%
SWISS RE LTD -1.00% 83.1 Delayed Quote.-22.96%
THE EASTERN COMPANY 0.13% 22.5 Delayed Quote.-26.30%
THE GLOBAL LTD. 12.81% 273 End-of-day quote.-42.04%
WORLD CO., LTD. -0.97% 1324 End-of-day quote.-50.80%
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Financials
Sales 2020 114 B 30 377 M 30 377 M
Net income 2020 1 905 M 508 M 508 M
Net Debt 2020 9 943 M 2 651 M 2 651 M
P/E ratio 2020 180x
Yield 2020 3,45%
Capitalization 290 B 77 190 M 77 194 M
EV / Sales 2020 2,63x
EV / Sales 2021 2,32x
Nbr of Employees 35 000
Free-Float 100,0%
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Technical analysis trends SAUDI BASIC INDUSTRIES CORPORATION
Short TermMid-TermLong Term
TrendsBullishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus UNDERPERFORM
Number of Analysts 13
Average target price 79,95 SAR
Last Close Price 96,50 SAR
Spread / Highest target -2,59%
Spread / Average Target -17,2%
Spread / Lowest Target -44,0%
EPS Revisions
Managers
NameTitle
Yousef bin Abdullah Al-Benyan Vice Chairman & Chief Executive Officer
Khalid H. Al-Dabbagh Chairman
Timothy D. Leveille Executive Vice President-Corporate Finance
Bob Maughon Executive Vice President-Technology & Innovation
Abdullah Mohammed bin Ibrahim Al-Issa Non-Executive Director
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