Walaa Cooperative Insurance Company has reported an overall positive net insurance result of SAR14m ($3.7m) in 1H2026, up from a loss of SAR160m in 2025, notes Fitch Ratings.
Walaa reported a net loss of SAR176m in 2025 (2024 net profit: SAR64m), resulting in a net income return on equity (ROE) of -10% (2024: 4%). This was driven mainly by underwriting losses in the medical and motor lines, as well as significant growth-related investment in the medical business, which was only partly offset by underwriting profitability in P&C and life insurance.
However, the insurer has repriced its motor portfolio and pruned loss-making business in both motor and medical, which supported a recovery in annualised ROE to 5% in 1H2026. Fitch expects ROE to remain modest over the next one-to-two years, in the low- to mid-single digits, and continue to remain a rating constraint.
Underwriting performance to continue improving
The Fitch-calculated non-life combined ratio improved to 99.5% in 1Q2026 from a weak 106% in 2025 (2024: 101%). The Fitch-calculated motor combined ratio improved in each quarter since 2H2025, reaching 106% in 1Q2026 from 130% in 1Q2025. Similarly, the medical combined ratio improved to 106% in 1Q2026 after peaking at about 138% in 2Q25.
The global credit rating agency expects the company’s non-life combined ratio to improve through pricing actions and tighter risk selection, but to remain slightly above 100% in 2026.
Ratings
Fitch has affirmed Walaa's Insurer Financial Strength (IFS) Rating at 'A-'. Fitch has simultaneously affirmed Walaa's National IFS Rating at 'AA+(sau)'. The outlooks are ‘Stable’.
The ratings reflect Walaa's strong capitalisation and company profile, offset by volatile financial performance.
Aside from financial performance, other key factors driving Walaa’s ratings include:
Strong Franchise in Saudi Arabia: Walaa's company profile reflects its substantial operating scale and established franchise. Walaa generated gross written premiums of SAR3.0bn in 2025 (2024: SAR3.5bn), making it the fifth-largest insurer in Saudi Arabia. Premiums declined in 2025, particularly in motor and medical lines, as the insurer rebalanced its portfolio to improve earnings. Walaa holds a strong market position in property and casualty (P&C) insurance and maintains a good position in the protection and savings (life) segment.
Well-Diversified Business Mix: Fitch's assessment of Walaa's company profile as strong is supported by the insurer's broad product mix. The insurer mainly underwrites P&C risks, including property, energy, engineering and other commercial lines, while also writing life, motor and medical insurance. Fitch expects Walaa's inward reinsurance business to continue to grow, albeit from a low base, supported by its 2025 acquisition of Aspire Underwriting Agency, a Dubai-based managing general agent specialising in facultative reinsurance.
Strong Capitalisation: Fitch views Walaa's strong capitalisation as a key credit strength, underpinned by its 'Extremely Strong' Prism Global score at end-2025 (unchanged from end-2024). Fitch expects Walaa to maintain a Prism score comfortably above 'Strong' over the medium term, supported by robust capital buffers. Walaa's regulatory solvency ratio was above 200% at end-1Q2026, exceeding both the regulatory minimum and the market average.
Fitch also expects the insurer to report a strong regulatory capital ratio under the new risk-based capital regime to be implemented from 1 January 2027. However, persistently weak earnings or rapid business growth not supported by capital generation could erode excess capital over time.
Significant Use of Reinsurance: Walaa cedes a large share of its P&C risks to reinsurers, providing strong protection against major loss events. Reinsurance receivables increased materially to SAR1.9bn in 2025 (end-2024: SAR0.7bn), reflecting significant use of reinsurance in its P&C-heavy business mix. Counterparty risk could increase following the government's requirement for Saudi insurers to cede 30% of risks to local reinsurers with right of first refusal.
However, any increase is unlikely to be material, as Fitch expects most cessions to remain with highly rated international reinsurers. The agency views Walaa's reinsurance panel as having generally strong credit quality.