SIGMIX: Comprehensive Analysis of Al-Walaa Cooperative Insurance

Al-Walaa Cooperative Insurance Company was established in 2007 in response to the Saudi market's need for insurance companies committed to Sharia principles and operating within a cooperative model. From the outset, the company established a robust organizational structure to support rapid expansion and growth, choosing Khobar as its headquarters due to its strategic location in the Eastern Province, the center of industry and energy in the Kingdom. Organizationally, Al-Walaa obtained an official license from the Saudi Arabian Monetary Authority (SAMA) to engage in insurance and reinsurance activities, allowing it to operate within a strict regulatory framework that ensures the protection of customers' and shareholders' rights. The company's board of directors consists of a select group of specialists in finance, insurance, and management, along with a highly efficient executive team overseeing daily operations and product development. As the company evolved, operational branches were opened in Riyadh and Jeddah, enhancing operational capacity and providing faster and closer services to customers across the Kingdom. The company's adoption of good governance and application of international management standards have strengthened its market position, especially after receiving positive credit ratings from global agencies. Furthermore, Al-Walaa has introduced specialized departments such as risk management, compliance, and innovation, enabling it to keep pace with the financial and competitive requirements of the sector. The company places special importance on developing human capital through specialized training programs and is keen to attract national talents to support its expansion plans. This integrated structure has allowed Al-Walaa to achieve stable growth and efficiently face market challenges while maintaining full compliance with the requirements of the Saudi Capital Market Authority.

Al-Walaa adopts a cooperative insurance model, which fundamentally differs from traditional commercial insurance. This model is based on the principle of cooperation among members to distribute risks, whereby all members share in covering the losses incurred by any of them, aligning with Islamic law that prohibits usury and gambling. Instead of generating capital profits for shareholders, insurance surpluses are redistributed or allocated as reserves within the cooperative fund. The application of this model is evident in Al-Walaa's operational policies, where the company commits to separating shareholders' funds from policyholders' funds and maintains high technical reserves to ensure the sustainability of the cooperative fund. Additionally, the company acts as a managing agent that manages members' funds for a fee or percentage, while the funds are exclusively used to cover legitimate losses and claims. The Capital Market Authority monitors this commitment to ensure transparency and fairness. Practically, Al-Walaa offers insurance products compliant with this approach, such as cooperative medical insurance, engineering insurance, and vehicle insurance, adhering to Takaful rules that prohibit investing funds in activities forbidden by Sharia. This model is attractive to a wide segment of Saudi clients who prefer Sharia-compliant financial solutions. The cooperative insurance model also provides flexibility in dealing with legislative and economic changes, allowing for the redistribution of surpluses or the enhancement of reserves as needed, which strengthens the company's stability in the face of major risks. This gives Al-Walaa a competitive advantage in a market where demand for Islamic financial products is increasing.

Al-Walaa Cooperative Insurance Company offers a wide range of insurance products that meet the needs of individuals and businesses in the Kingdom. Al-Walaa's insurance portfolio includes vehicle insurance, group and individual medical insurance, property and fire insurance, engineering insurance, and personal accident insurance. In the vehicle insurance sector, Al-Walaa provides mandatory insurance policies (third-party) and comprehensive insurance, with various coverages including accidents, thefts, and natural disasters. In medical insurance, the company offers flexible health programs that cover essential and advanced treatments, targeting both small and medium enterprises and large corporations, with the possibility of customizing programs according to client needs. In the engineering insurance sector, Al-Walaa's policies cover contracting and construction projects, including all risks for contractors and installation risks, enhancing confidence among contracting companies and real estate developers. The company also provides fire and property insurance services for homes and businesses, covering losses resulting from fire incidents, explosions, and thefts. Additionally, personal accident insurance provides financial protection in case of injuries or disabilities. Al-Walaa is committed to developing new products that keep pace with market developments, such as electronic insurance and cyber risk insurance, and works on integrating digital solutions into underwriting and customer service operations. The company invests in building partnerships with hospitals, workshops, and medical service providers to ensure prompt claims processing and quality service. This diverse range of products gives Al-Walaa a high competitive capacity and motivates it to continuously innovate to meet the changing needs of the Saudi market.

Al-Walaa recognized early on the importance of digital transformation in the insurance sector, especially with the Kingdom's shift towards digitizing financial services as part of Vision 2030. The company launched a comprehensive online platform that allows customers to purchase policies, renew them, and track claims instantly, contributing to expedited processes and reducing the need for physical visits to branches. Al-Walaa also provided a mobile application that enables inquiries about policies, submitting claims, and obtaining quotes within minutes. The company focuses on utilizing artificial intelligence technologies in risk analysis and pricing policies, which helps provide tailored offers for each client based on their data. In terms of customer service, Al-Walaa launched multiple support channels, including live chat, email, and a 24/7 call center, to ensure quick responses and problem resolution. The company places significant importance on information security, adopting advanced encryption protocols to protect customer data and digital operations from breaches. It is also working on developing electronic insurance solutions (Insurtech) through potential partnerships with fintech companies. Al-Walaa's digital transformation also includes automating internal processes such as claims management, accident settlement, and financial auditing, enhancing operational efficiency and reducing human errors. This investment in technology positively reflects on the customer experience and enhances market confidence in the company's ability to keep pace with global developments. These steps are essential to strengthen Al-Walaa's competitiveness in a market experiencing rapid digital transformation and increasing demand for electronic services.

Al-Walaa's financial performance during 2024 and 2025 was characterized by relative stability despite the challenges posed by regulatory and economic changes. The company maintained a paid-up capital of 200 million Saudi Riyals, reflecting its commitment to solvency rules and its focus on enhancing sustainability. The share price of Al-Walaa in mid-2025 was approximately 11.82 Saudi Riyals, bringing the company's market capitalization to around 1.51 billion Riyals, placing it among mid-sized companies in the Saudi insurance sector. In terms of profitability, the price-to-earnings (P/E) ratio reached 37.61 times, a relatively high rate indicating that the stock is valued at a high ratio of current earnings, often reflecting expectations of future growth or temporary fluctuations in profits. The company had not announced any cash dividends by mid-2025, preferring to reinvest profits in expansion and support technical reserves to face future risks. Underwritten premiums saw a gradual increase, benefiting from the enforcement of mandatory insurance and increased insurance awareness in the Saudi community. Al-Walaa implemented the International Financial Reporting Standard IFRS 17 since early 2024, leading to changes in the way provisions and net profits are calculated, resulting in some temporary fluctuations in quarterly results. The company's commitment to regularly disclosing its quarterly and semi-annual financial results reflects the level of transparency required in the Saudi financial market. Overall, these indicators demonstrate Al-Walaa's ability to achieve a balance between growth and financial stability, while being prepared to face any future changes in the sector.

In early 2024, Al-Walaa began implementing the International Financial Reporting Standard IFRS 17, which brought about a radical transformation in the way insurance companies in the Kingdom present their financial data. This standard aims to enhance transparency and comparability among companies by standardizing revenue and insurance provision calculation methods. For Al-Walaa, the implementation of IFRS 17 had a direct impact on quarterly and semi-annual profit reports, requiring a reevaluation of the insurance portfolio and a more accurate calculation of future liabilities. This led to temporary fluctuations in net profit between financial periods, especially with the accounting of deferred premium returns and changes in surplus allocation methods. Disclosure requirements also increased, as the company is now required to provide detailed data on revenue sources, types of covered risks, and levels of technical reserves. Al-Walaa benefited from implementing IFRS 17 in improving risk management and enhancing operational efficiency, as it became possible to track the performance of each insurance product individually and identify strengths and weaknesses more accurately. The new standard also prompted the company to enhance its IT infrastructure to ensure data accuracy and rapid reporting. Organizationally, the implementation of IFRS 17 has bolstered Al-Walaa's credibility with regulatory authorities and investors, demonstrating its commitment to international standards. Although the transition period faced some challenges in adapting to new requirements, the company successfully met all conditions and disclosures, supporting its financial stability and readiness to face increasing market competition.

Al-Walaa's stock is one of the traded options in the Saudi stock market (Tadawul), with its data continuously updated on the official platform. In mid-2025, the stock price reached approximately 11.82 Saudi Riyals, indicating a medium valuation compared to some major insurance companies in the market. With a fixed capital of 200 million Riyals and a stable number of traded shares, the company's market capitalization was about 1.51 billion Riyals, placing it among mid-sized companies in terms of size. The price-to-earnings (P/E) ratio recorded 37.61 times, reflecting either investor optimism about future profit growth or temporary profit fluctuations resulting from the application of new standards or market changes. It is important to note that the high P/E ratio may attract the attention of financial analysts studying sector forecasts, especially in light of the absence of recent cash dividends. The lack of dividend distribution indicates the company's desire to enhance reserves and support expansion and innovation plans rather than distribute profits to shareholders at this time, which is common among mid-sized insurance companies or those undergoing reinvestment phases. Al-Walaa's stock performance is influenced by several factors, including quarterly financial report results, legislative changes, sector competition, and general economic trends. Additionally, the level of transparency the company demonstrates in disclosing its financial and administrative developments enhances investor confidence. Overall, Al-Walaa's stock remains under the watchful eye of investors interested in the cooperative insurance sector in the Kingdom.

Al-Walaa competes with a range of cooperative insurance companies listed in the Tadawul market, including Tawuniya, Gulf Union (Waqaya), Brol, Alinma Tokio Marine, and Fawaz Al-Hokair Insurance, alongside other companies such as Bupa Arabia and Malath. Although Al-Walaa is classified as a mid-sized company compared to Tawuniya or Bupa Arabia, it has managed to build a growing customer base by focusing on service quality and product diversity. Financially, Al-Walaa has maintained a stable market value and a medium market share, with a notable ability to innovate in cooperative products. In comparison, some competing companies possess larger insurance portfolios or investments in diverse sectors such as group health insurance or life insurance, but Al-Walaa has distinguished itself by its strict adherence to cooperative insurance principles and its alignment with the religious and cultural trends of the Saudi market. Al-Walaa faces fierce competition in standard products such as medical insurance and vehicle insurance, where all players strive to offer competitive prices and advanced digital services. However, Al-Walaa benefits from its reputation for transparency and governance, focusing on customer segments seeking Sharia-compliant solutions. Conversely, challenges facing Al-Walaa include its relatively low market share compared to larger players and profit fluctuations resulting from the application of international standards or changes in claims prices for certain products. These dynamics reflect the ongoing need to improve risk management and expand the product base to enhance its competitive position in the future.

Al-Walaa plays a pivotal role in supporting the goals of Vision 2030, particularly in enhancing financial inclusion and increasing the insurance sector's contribution to the national economy. With the Kingdom's direction to raise the percentage of mandatory insurance and expand the insured base, Al-Walaa contributes by providing innovative insurance products that meet the needs of individuals and businesses, helping to manage the economic risks of the community. The company enhances digital transformation by developing its electronic platforms and adopting modern technologies, aligning with the financial sector's digital transformation strategy. Al-Walaa works to raise insurance awareness through educational campaigns and training programs, targeting an increase in the insurance coverage rate in the Kingdom and reducing the gap in health and commercial insurance. The company also supports small and medium enterprises by providing flexible insurance solutions that help protect their investments and ensure their sustainability. In enhancing the investment environment, Al-Walaa is committed to applying the highest standards of governance and transparency, reflecting the trust of regulatory authorities and investors in its ability to meet obligations. Al-Walaa's participation in national initiatives, such as mandatory insurance for workers in various sectors, exemplifies its positive engagement with government policies. The company emphasizes its commitment to supporting the non-oil economy by diversifying products and investing in national competencies. All these efforts position Al-Walaa as a strategic partner in achieving the goals of Vision 2030 and elevate its status within the Saudi financial sector framework.

During 2024 and 2025, Al-Walaa witnessed several developments and official announcements reflecting the company's dynamism in responding to market changes. In February 2025, Al-Walaa received a stable credit rating from Fitch Ratings, reflecting its strong financial position and ability to meet insurance obligations. In May 2025, the company announced the results of the extraordinary general assembly meeting, along with disclosing the results for the first and second quarters of the year, confirming its commitment to transparency and regular disclosure principles. From an administrative perspective, the company announced in July 2025 the appointment of a new chairman and vice-chairman of the board, aiming to enhance governance and prepare for a new phase of growth. Al-Walaa continued to develop its digital infrastructure without announcing major partnerships with fintech companies until mid-2025, but it showed clear interest in investing in Insurtech solutions in the future. On the regulatory side, the company confirmed its full commitment to implementing IFRS 17 and updating its technical reserve policies in accordance with the requirements of the Capital Market Authority. The company has not announced any increases in capital to date, while it continued to strengthen its financial reserves to support expansion plans. These developments reflect Al-Walaa's strategies to enhance financial stability, develop leadership, and invest in modern technologies, supporting its ability to face market challenges and competition.

Al-Walaa places risk management at the core of its operational strategy, recognizing the importance of building a balanced and sustainable insurance portfolio in a market experiencing periodic fluctuations. The company relies on strict policies in risk assessment during underwriting, using advanced analytical tools and artificial intelligence techniques to determine the likelihood of losses and estimate the necessary provisions. Al-Walaa pays special attention to high-risk sectors such as engineering and vehicle insurance, imposing underwriting limits and reinsuring with global companies to ensure risk distribution. The company continuously monitors loss rates across various products and updates premium prices to cover changes in claims patterns. On the regulatory side, the company adheres to the Capital Market Authority's directives regarding the separation of risk management from daily operations and ensuring decision-making independence. Al-Walaa also seeks to diversify its product portfolio to reduce reliance on a single sector, having worked to increase the share of medical and commercial insurance in recent years. The company is keen on building strong technical reserves, supporting its ability to face large claims or unforeseen disasters. These policies enhance trust among both investors and customers, supporting the company's ability to achieve financial sustainability and long-term growth in a competitive and regulatory environment.

The insurance sector in Saudi Arabia faces a range of opportunities and challenges that directly impact the performance of companies like Al-Walaa. Among the most prominent opportunities is the growing demand for medical and commercial insurance, driven by the expansion of mandatory insurance and increased community awareness of the importance of insurance protection. The digital transformation has also provided significant opportunities for offering innovative services and expanding the customer base through electronic platforms. On the other hand, Vision 2030 enhances investment and expansion opportunities in new products such as cyber insurance and insurance for major projects. However, the sector also faces significant challenges, primarily fierce competition among companies for prices and market shares, which sometimes leads to erosion of profit margins. Additionally, the implementation of accounting standards such as IFRS 17 imposes complex technical and regulatory requirements that necessitate substantial investments in systems and infrastructure. The ongoing changes in legislation and solvency requirements, along with economic fluctuations that may affect premium volumes and claims, further exacerbate these challenges. Companies need to enhance risk management, diversify products, and invest in national competencies and modern technologies to address these challenges and achieve sustainable growth. In this context, Al-Walaa appears well-positioned to capitalize on available opportunities, provided it continues to innovate and respond swiftly to market changes.

Al-Walaa places utmost importance on transparency and governance, committing to regular disclosure of its financial results and administrative developments in accordance with the requirements of the Saudi Capital Market Authority. The company adopts a governance structure that ensures the separation between the board of directors and the executive body, with independent committees for oversight, auditing, and risk management. Al-Walaa is keen to apply best practices in managing relationships with shareholders, providing detailed reports on financial performance, investments, and operational developments through its website and trading platforms. The company also adheres to anti-money laundering and counter-terrorism financing policies, implementing strict compliance standards to ensure the protection of customer and shareholder funds. On the operational side, the company's operations undergo regular internal and external audits, enhancing its credibility with regulatory authorities and investors. Al-Walaa supports a culture of reporting violations and encourages employees to adhere to values of integrity and transparency. This commitment directly reflects on customer and investor trust in the company, as transparency is a fundamental pillar in building a strong reputation in a sensitive sector like insurance. These policies also support Al-Walaa's ability to attract new investments and partnerships, positioning it favorably among Saudi companies committed to good governance.

Al-Walaa is preparing to continue its growth and expansion journey in the coming years through several clear strategic directions. The company places digital transformation at the top of its priorities, aiming to improve customer experience and increase operational efficiency through the use of artificial intelligence, data analytics, and process automation. Al-Walaa also plans to expand its product portfolio to include cyber insurance, agricultural insurance, and insurance products targeted at individuals in currently uncovered sectors. The company focuses on strengthening partnerships with fintech companies (Insurtech) and electronic platforms to expand its customer base and reach new market segments. In terms of risk management, Al-Walaa seeks to improve forecasting tools and reinsurance, increasing investments in building technical reserves to face disasters and major risks. On the financial side, the company is considering future capital increase opportunities to support expansion plans while maintaining its commitment to dividend distribution policies that balance shareholder interests with growth needs. The company continues to invest in developing national competencies and training programs, supporting its ability to innovate and sustain itself. Overall, Al-Walaa's future directions are based on a solid financial foundation, a high commitment to governance, and a clear vision to keep pace with rapid transformations in the local and global insurance sector.