Fitch Ratings has assigned Walaa Cooperative Insurance's an Insurer Financial Strength (IFS) Rating of 'A-' and National IFS Rating of 'AA+(sau)'. The outlooks are 'Stable'.
The ratings reflect Walaa's strong capitalisation and company profile, partly offset by volatile financial performance and earnings, says Fitch.
Walaa’s key rating drivers include:
Strong Franchise in Saudi Arabia: Fitch's assessment of Walaa's company profile reflects its substantial operating scale and franchise. Walaa's gross written premiums were SAR3.5bn ($933m) in 2024 (2023: SAR3.3bn), making it the fifth-largest insurer in Saudi Arabia.
Walaa holds a strong market position in the property and casualty (P&C) business and maintains good market positioning in the protection and savings segment, where it expanded its scale, supported in part by the merger with SABB Takaful in 2022.
Fitch views Walaa's exposure to a wide-ranging product mix as supportive of the company profile assessment.
Acquisition of underwriting agency: Walaa’s acquisition in May 2025 of an 88% stake in Aspire Underwriting Agency is expected to provide the insurer with access to markets outside Saudi Arabia and support gradual growth in inwards reinsurance business over the medium to long term, says Fitch.
Aspire is a Dubai-based managing general agent specialising in facultative reinsurance across energy, power, and property.
Strong Capitalisation: Fitch regards Walaa's strong capitalisation as a key credit strength, underpinned by its 'Extremely Strong' Prism Global score at end-2024, unchanged from end-2023. Fitch expects Walaa to maintain a Prism score well above 'Strong' over the medium term, supported by robust capital buffers. However, persistently weak earnings or rapid business growth not supported by capital accumulation could erode the excess capital.
Rights Issue Supports Capital: In December 2024, Walaa raised SAR460m through a rights issue to support growth and strengthen its solvency position. Consequently, Walaa's regulatory solvency ratio improved to 209% at end-2024 from 172% at end-2023, exceeding the regulatory minimum and market average. Walaa has no financial leverage, which Fitch sees as credit positive.
Earnings Volatility Constrains Ratings: Fitch expects that intense price competition in the Saudi motor and medical segments, coupled with increasing growth-related investment costs and thin margins in medical, will continue to pressure Walaa's underwriting profitability over the near term. However, Fitch expects the insurer's overall performance to gradually recover, supported by growth in more profitable P&C segments and the expansion of the life insurance portfolio, with a focus on selective underwriting in motor and a measured scaling of the medical insurance business.
Walaa's net income return on equity (ROE) was modest at 4% in 2024, down from 12% in 2023, reflecting weaker underwriting results. Walaa reported a net loss of SAR68m in 1Q2025. The Fitch-calculated non-life combined ratio was 101% in 2024, slightly weakening from 100% in 2023 (three-year average: 102%), due to higher losses in motor and medical lines.
Significant Reliance on Reinsurance: Walaa cedes a large majority of its P&C risks to reinsurance counterparties, providing strong protection against major loss events. Fitch considers the credit quality of Walaa's reinsurance panel to be strong and its exposure to catastrophe risk to be low. The global credit agency expects that counterparty risks may increase following the government's requirement for Saudi insurers to allocate 30% of reinsurance cessions to local reinsurers, granting them the right of first refusal. However, the increase is unlikely to be material as Fitch expects most cessions to be with highly rated international reinsurers.