Arab Cooperative Insurance Company: Comprehensive Financial Analysis

The Arab Cooperative Insurance Company was established as one of the leading firms in the cooperative insurance sector in the Kingdom of Saudi Arabia. The company operates under the locally followed cooperative insurance system, which distinguishes itself from commercial insurance by distributing the insurance surplus among policyholders. The company provides its services to individuals and institutions, with a strict commitment to Sharia standards, earning the trust of a wide customer base.

The company is present in the Saudi financial market (Tadawul) within the insurance sector and is supervised by the Capital Market Authority and SAMA, imposing a high commitment to financial disclosure and governance. The company's services cover a wide range of insurance products, notably health insurance, vehicle insurance, property insurance, engineering insurance, marine and aviation insurance, and professional and general liability insurance.

The company is also committed to developing its products in response to market demands and keeping pace with regulatory changes, focusing on innovation and digital transformation to enhance customer experience. This strong position in the Saudi market enhances the company's ability to compete and attract new contracts, especially amid the continuous growth of the insurance sector in the Kingdom.

The Arab Cooperative Insurance Company experienced stable performance during 2024 and 2025, with some challenges arising from the implementation of new accounting standards and economic conditions. The current share price is approximately 55.6 SAR, while the company's market capitalization is estimated in the hundreds of millions of SAR, based on the number of outstanding shares (approximate example: 8.34 billion SAR if the number of shares is 150 million).

The price-to-earnings (P/E) ratio stands at 6-8 times, which is relatively low compared to some companies in the sector, reflecting the market's valuation of future earnings. The cash dividend yield remained around 2-3%, influenced by the policy of retaining a larger portion of profits within reserves to meet IFRS 17 requirements.

The financial results for the third quarter of 2025 showed a net profit before zakat of 7.6 million SAR, while total profits for the first nine months of 2025 amounted to approximately 35.3 million SAR, a decrease of 5% compared to the same period in 2024. These indicators suggest a slowdown in revenue and profit growth due to regulatory factors and operational challenges, with expectations for gradual improvement in performance as the sector stabilizes.

The Saudi insurance sector is considered one of the vital sectors that has witnessed significant development in recent years, supported by regulatory reforms, increased insurance awareness, and the implementation of mandatory insurance in several areas. The Arab Cooperative Insurance Company plays an active role in this sector by offering diverse products and responding to market demands.

The implementation of IFRS 17 has changed the way profits and reserves are recognized, leading to a temporary decline in profits for insurance companies, including the Arab Cooperative Insurance Company. Conversely, government initiatives such as expanding mandatory health insurance and increasing demand for specialized insurance (such as marine and engineering insurance) have supported the overall growth of insurance premiums in the sector.

The sector also contributes to financial stability through the strict capital requirements imposed by SAMA, in addition to encouraging investments in fixed-income instruments and government bonds, helping companies achieve good investment returns. In this environment, the importance of digital innovation and product development emerges, which the company is working on to enhance its market position.

The stock of the Arab Cooperative Insurance Company experienced notable fluctuations between 2024 and 2025. After reaching an annual high of 73.9 SAR in September 2024, it later declined to a low of 48.8 SAR in mid-2025, before stabilizing around 55.6 SAR recently. These movements reflect investors' responses to key events such as earnings results, the application of IFRS 17, and sector news.

The current P/E ratio (6-8) is low compared to the sector average, which may be explained by investors awaiting improvements in profit margins after absorbing accounting changes. The stock's performance is also linked to future growth expectations in insurance premiums and investment returns, in addition to macroeconomic variables such as interest rates and inflation levels.

The stock's movement underscores the importance of monitoring the company's quarterly results, regulatory developments, and competitor performance, as these factors collectively influence investor sentiment and their assessment of the stock price in the market.

The implementation of International Financial Reporting Standard 17 (IFRS 17) has restructured the way profits and reserves are calculated in the Saudi insurance sector. For the Arab Cooperative Insurance Company, this has reflected in an increase in technical reserves and a decrease in reported profits during 2024 and 2025.

The new standard requires more accurate recording of future liabilities, meaning a larger portion of revenues must be allocated to reserves rather than recognized as immediate profits. This effect was clearly seen in the company's net profits, which declined by 5% during the first nine months of 2025 compared to the same period in 2024.

Despite this, it is expected that companies will gradually return to improved profit margins as they adapt to the new standards, particularly with enhanced claims management and operational efficiency. This regulatory shift remains a pivotal factor in evaluating the company's future results.

The Arab Cooperative Insurance Company derives its revenues from several key sources: written insurance premiums, investment returns, and service fees. Health insurance and vehicle insurance are among its most significant contributors to total revenues, given the increasing demand in these sectors, especially with the expansion of mandatory health insurance and the rising number of vehicles in the Kingdom.

Engineering insurance, property insurance, and marine and aviation insurance products also contribute to revenue diversification and reduce risks associated with market fluctuations. Investment returns play a crucial role in supporting profitability, as the company invests a significant portion of its liquidity in low-risk financial instruments such as government bonds.

With the implementation of modern accounting standards, the importance of claims management and controlling the claims ratio emerges as a key factor in improving financial performance. The company is keen on developing new products that comply with market and Sharia requirements to enhance its market share.

The Arab Cooperative Insurance Company faces strong competition from large companies in the Saudi market, including Tawuniya, Medgulf, Bupa Arabia, Al-Ahli Takaful, and United Insurance Company. These companies compete on service quality, product diversity, pricing, and financial solvency.

For instance, Bupa Arabia dominates health insurance, while Tawuniya and Medgulf excel in general and vehicle insurance. The Arab Cooperative Insurance Company distinguishes itself by focusing on Sharia-compliant products and its ongoing efforts to provide innovative solutions to clients.

Competition also relies on the ability to secure contracts with major companies and government entities, in addition to developing digital distribution channels and geographic expansion. Financial stability and the ability to meet regulatory capital requirements are among the most critical success factors for companies in this changing sector.

The Saudi insurance sector witnessed a series of regulatory developments in 2024-2025 that directly affected the performance of the Arab Cooperative Insurance Company. Among the most notable developments was the full implementation of IFRS 17, which led to significant changes in revenue and reserve recognition.

The Capital Market Authority also issued new guidelines to enhance corporate governance and improve disclosure and communication with shareholders. At the same time, SAMA launched initiatives to develop smart vehicle insurance using big data, opening the door for companies to provide more advanced and efficient services.

The company responded to these changes by strengthening its reserve policies, developing new digital products, and improving customer experience through its electronic platforms. These efforts are expected to enhance competitiveness and improve performance indicators in the medium to long term.

Financial investments play a crucial role in supporting the profits of insurance companies, including the Arab Cooperative Insurance Company. The company invests a significant portion of its available liquidity in government bonds and fixed-income instruments, which have recently seen increased returns due to rising interest rates.

These investments have helped offset some of the decline in profits from insurance operations, especially during periods of reduced underwriting margins. Additionally, investment liquidity provides further support for capital requirements and technical reserves mandated by regulations.

The company pays special attention to managing investment portfolios conservatively, focusing on risk reduction and achieving stable returns. Investments are expected to continue playing a pivotal role in achieving financial balance and addressing cyclical fluctuations in the sector.

The results of the Arab Cooperative Insurance Company in recent years have shown modest revenue growth, accompanied by a slight decline in net profits due to claims expenses and increased reserves. The main challenges lie in controlling the claims ratio and managing operating expenses, along with the ongoing need to develop products and expand the market base.

Conversely, the increasing demand for health and vehicle insurance presents significant growth opportunities, especially with the expansion of mandatory insurance and heightened insurance awareness. Digital initiatives and the shift towards electronic insurance also help improve operational efficiency and reduce costs in the long term.

The ability to attract new insurance contracts and enhance claims management are critical factors for achieving sustainable profit growth, alongside the necessity to comply with regulatory standards and capital requirements.

The Arab Cooperative Insurance Company follows a relatively conservative dividend distribution policy, preferring to retain a significant portion of profits to support technical reserves and meet regulatory requirements. In recent years, this has reflected in a decline in cash dividend yield to around 2-3%, compared to the insurance sector average of 3-4%.

The primary reason for this approach is the impact of IFRS 17, which has reduced distributable profits. However, dividends are expected to gradually improve as the regulatory environment stabilizes and the company's financial results improve.

Investors are advised to monitor the annual general assembly decisions regarding distribution policies, keeping in mind that dividends are not guaranteed and are subject to financial conditions and capital requirements at any given time.

The future of the Arab Cooperative Insurance Company is linked to the growth of its insurance sales and its ability to improve claims management and reduce costs. With sustained strong demand for health and vehicle insurance and the expansion of mandatory insurance, growth opportunities remain available for the company.

Forecasts indicate potential improvement in profit margins as the requirements of IFRS 17 are absorbed and investment returns increase. Additionally, the development of digital products and technological partnerships may contribute to expanding the customer base and enhancing operational efficiency.

On the other hand, intense competition and regulatory changes remain significant challenges facing the company. Investors are advised to monitor the company's quarterly results and compare them with competitors' performance to gain a comprehensive picture of the company's evolution in the market.

The financial performance of the Arab Cooperative Insurance Company can be monitored through several official sources, most notably the Saudi Tadawul website (saudiexchange.sa), which provides real-time data on the stock price, market capitalization, and quarterly and annual financial reports.

The company's official website also features an investor relations section that includes financial reports, general assembly announcements, and company news. The Capital Market Authority (CMA) can be referred to for regulatory announcements, in addition to financial analysis platforms such as Argaam, which provide summaries and recent analyses of the company's results.

It is advisable to rely on these sources to verify numbers and financial information before making any investment decisions or tracking the company's developments.