The earnings of Aljazira Takaful Taawuni Company (AJT) are supported by diversified sources of profit, with strong and predictable earnings from life insurance offsetting the volatile earnings in non-life lines, notes Fitch Ratings.
The insurer's Fitch-calculated net income return on equity (ROE) was modest at an annualised 3% in 1Q2026 (2025 and 2024: 4%), but has remained broadly stable over recent years, as resilient profitability from the life book was partly offset by more volatile non-life performance. Fitch expects ROE to remain in the mid-single digits over the medium term.
AJT's Fitch-calculated non-life combined ratio weakened to 106% in 2025 from 100% in 2024, before improving to 102% in 1Q2026, driven by motor price adjustments in 2H2025 and better risk selection. Fitch expects these pricing actions to continue earning in 2026, supporting further improvement in the non-life combined ratio over the year. Fitch views intense price competition in motor and elevated medical cost inflation as key risks to Saudi non-life market profitability.
Ratings assigned
Fitch has assigned AJT an Insurer Financial Strength (IFS) Rating of 'BBB+' and a National IFS Rating of 'AA-(sau)'. The outlooks are ‘Stable’. The ratings reflect AJT's very strong capitalisation, resilient earnings, and its well-established life insurance franchise, partly offset by its modest overall operating scale.
Aside from diversified earnings sources, the key rating drivers for AJT include:
Established Life Insurance Franchise: AJT's company profile reflects its established franchise in the growing Saudi life insurance segment, offset by its modest overall operating scale.
AJT is one of the more established insurers in Saudi Arabia's small, albeit expanding, life insurance market, particularly in unit-linked individual life insurance, while also maintaining a diversified presence in group life and more mature non-life segments, including medical, motor, and property & casualty.
In 2025, life insurance accounted for 48% of gross premiums written, comprising 31% from individual life and 17% from group life. Medical accounted for 26%, motor for 18% and P&C for 8%.
Modest Operating Scale: AJT's gross written premiums increased 24% to SAR526m ($140m) in 2025, supported by growth in both life and non-life lines. Fitch expects AJT to benefit from growth opportunities in the under-penetrated Saudi life insurance market.
However, its operating scale, as measured by premiums, is likely to remain small relative to other Fitch-rated Saudi insurers, as the Saudi insurance market will continue to be dominated by non-life business, particularly medical and motor. Accordingly, Fitch adjusts AJT's implied IFS Rating of 'A-' down by one notch to 'BBB+' to reflect its limited operating scale.
Very Strong Capitalisation: Fitch regards AJT's capitalisation as a key credit strength. Fitch’s assessment reflects its unchanged Prism score of 'Extremely Strong' at end-2025. The score is supported by the insurer's large available capital base, including a sizeable contractual service margin, partly offset by goodwill arising from its 2021 merger with Solidarity Saudi Takaful Company. It also reflects the unit-linked nature of liabilities in AJT's life portfolio, where a large majority of risks are borne by policyholders, resulting in low insurance and investment risk charges. Fitch expects AJT's Prism score to remain comfortably within the 'Extremely Strong' category over the medium term.
AJT's regulatory solvency ratio under the current capital regime is well above the regulatory minimum of 100%. Fitch expects the insurer to report a strong regulatory capital ratio under the new risk-based capital regime that will be implemented from 1 January 2027.
Low-Risk Investments: Fitch views AJT as following a conservative investment policy. The insurer's investment portfolio is dominated by investment-grade sukuk, cash and short-term deposits, which together accounted for around 90% of invested assets; exposure to equities was modest. A large majority of AJT's invested assets are liquid and provide sufficient coverage of its non-linked net technical liabilities.