Saudi Arabia's central bank would welcome mergers among local insurance companies as long as they were positive for all parties, central bank governor Fahad Al-Mubarak said on Thursday.

A number of Saudi insurance firms have been loss-making for years because of severe competition in the market, where large companies with capital of some SR1 billion ($267 million) dominate small firms capitalised at around SR200-400 million, which find it hard to compete.

Economists have called for mergers between small companies to create bigger entities that are more able to survive.

"The Saudi Arabian Monetary Agency welcomes any merger request if it meets all requirements and if the merger will yield positive results to all parties," Mubarak told Al Arabiya television.

He said the central bank was working hard with the managements of insurance firms to study their internal situations and develop restructuring plans so they could return to profitability.

"We have noticed big improvement in the financial performance and solvency of insurance firms," he added.

Of 35 listed insurers, six have accumulated losses ranging between 50 and 75 per cent of capital, and one has losses of between 75 and 100 per cent of capital, according to stock exchange data. The capital of these loss-making firms ranges between SR200 million and SR555 million. - Reuters