The Impact of Investment Policies on the Financial Solvency of Insurance Companies in the Kingdom of Saudi Arabia

Abstract

This study investigates the impact of investment policies on the financial solvency of insurance companies listed on the Saudi Stock Exchange. Insurance companies play a dual role in the financial system, not only by providing risk coverage but also by managing substantial investment portfolios that influence their financial stability. Despite their active investment activities, variations in solvency levels across Saudi insurers raise questions regarding the effectiveness of their investment strategies. The research seeks to examine whether investment policies particularly in terms of asset allocation, diversification, and investment horizon, significantly affect the ability of insurance firms to meet their obligations and maintain financial resilience. The study is of scientific and practical importance, as it addresses a gap in the literature concerning the Saudi insurance market and integrates financial, investment, and solvency concepts into a unified analytical framework. Empirically, it aims to measure solvency using key financial indicators and assess its relationship with different dimensions of investment policy. The findings are expected to offer actionable insights for insurance executives, risk managers, and regulators, helping to formulate balanced investment strategies that optimize returns while ensuring solvency. Moreover, the study contributes to Saudi Vision 2030 objectives by promoting a more robust and sustainable insurance sector aligned with the Kingdom’s financial stability goals.