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Saudi Arabia: Insurers turn in mixed bag of 1H results

Source: Middle East Insurance Review | Sep 2015

Several insurers in Saudi Arabia have posted improved financial results for the first half of this year. While some gained in strength, a few showed wild swings in performance.
   Among the biggest insurers in the Kingdom, the Company for Cooperative Insurance (Tawuniya) posted SAR316 million (US$84 million) in net profits before zakat for the first half of this year, 36% higher than the SAR234 million chalked up for the corresponding half last year. Tawuniya attributed the profit increase to higher net premiums earned and investment gains.
   Health insurer Bupa Arabia saw net profits surge to SAR150 million in the first half of this year, from SAR17 million in the first half of 2014. In a statement to Tadawul, Bupa Arabia said that the improvement in results was mainly due to strong business growth, combined with lower net claims incurred.
   Among the insurers which have announced their first half financial results so far, several reported significant turnarounds in performance from the same period last year. These included Al Alamiya for Cooperative Insurance, Trade Union Cooperative Insurance (TUCI) and United Cooperative Assurance (UCA).
   TUCI, which turned around from SAR10 million in losses in the first half of 2014 to SAR23 million in the first half of 2015, attributed its improved results to a conservative underwriting policy that resulted in underwriting higher-quality contracts. The company also saw lower net claims incurred, especially for motor and medical insurance, and decreased policy acquisition costs in addition to reduced doubtful debts. 
   Both Al Alamiya and UCA cited increases in net written premiums and decreases in incurred claims as reasons for their better financial results in the first half. Al Alamiya recorded net profits of SAR12 million compared to losses of SAR26 million in the first half of 2014, while UCA saw net profits of SAR24 million compared to losses of SAR15 million.
   Meanwhile, Medgulf Insurance & Reinsurance Company, one of the largest operators in the market, announced net losses before zakat of SAR187 million for the first half year, compared to profits of SAR102.8 million for the corresponding period last year. The losses were attributed to an increase in net claims for the first six months of this year, due to increased net claims reserves made according to actuarial recommendations.
   Al Ahlia for Cooperative Insurance, which saw net losses widen from SAR139,000 to SAR15 million over the year, cited a decline in net earned premiums and reclassification of expenses as reasons behind the results. Gulf General Cooperative Insurance attributed lower premiums written and higher general and administrative expenses in addition to a special deficit of SAR5.5 million in premiums for its loss of SAR5 million in the first six months of 2015, compared to its profit of SAR7 million a year ago.
 
SAR1 = US$0.27
 
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