The paper describes the investigation of saturation effect in newly developed MgAl2O4:Co saturable absorber with the aim of thermally bounding it with the active media such as erbium glasses. On the basis of the experimental results the most important parameters, from the point of view of laser generation, such as ground state absorption cross section, excited state absorption cross section and dissipative losses were calculated. The comparison of this parameters with the parameters presented in the literature was done showing the advantages of the newly developed saturable absorber over commercially available ones.