SIGMIX: Comprehensive Analysis of Al Rajhi Takaful Stock Performance

Al Rajhi Takaful Company was established as one of the leading cooperative insurance institutions in the Kingdom of Saudi Arabia, operating under an official license in accordance with Sharia principles. The company is part of the Al Rajhi Banking Group and benefits from its extensive network and rich experience in the financial sector. Al Rajhi Takaful adopts the Islamic Takaful model, which focuses on the principle of sharing risk coverage among members, rather than the traditional commercial insurance concept. The company offers a variety of insurance products, including health insurance, vehicle insurance, property insurance, and life insurance, in addition to products tailored for Al Rajhi Bank customers, such as insurance on real estate and personal financing. The company's close association with Al Rajhi Bank distinguishes it, providing a broad customer base and opportunities for growth in insurance premiums and enhancing its market presence. The company is supervised by the Saudi Arabian Monetary Authority (SAMA) regarding solvency and governance, which increases its credibility in the market and enhances customer trust.

The announced financial data indicates that Al Rajhi Takaful stock experienced several changes during 2024 and 2025. The stock price in January 2025 was approximately SAR 76.30, representing a sharp decline from its levels in the previous year, as the stock lost more than half of its value over 12 months, with a decline rate of -52.93%. The company's market capitalization was about SAR 8.03 billion, reflecting its classification among medium to large companies in the cooperative insurance sector. The trading volume over the last three months reached 203 million shares, with a total value of approximately SAR 21.23 billion, indicating relatively good liquidity. Regarding the price-to-earnings (P/E) ratio, the company has not announced a recent official value, but estimates suggest it is relatively low compared to some competitors due to the price drop and increased profitability in 2023. As for distributions, the company has not announced cash distributions for 2024 or 2025, preferring to distribute bonus shares to increase capital and enhance reserves instead of direct cash distribution.

Throughout 2024 and into early 2025, Al Rajhi Takaful stock exhibited clear volatility. The year began with a relatively high price, but it faced strong selling pressures that led to a significant decline in market value. On January 15, 2025, the stock closed at SAR 76.30, after reaching a high of SAR 78.10 and a low of SAR 76.30 in the same session. These fluctuations are attributed to a combination of factors, including declining sentiment in the Saudi market overall, local and global economic changes, and regulatory developments in the insurance sector. Additionally, the increase in capital through the distribution of free shares in December 2023 affected the number of outstanding shares, leading to an increase in total market capitalization, without directly reflecting on the individual stock price. Liquidity in the stock remains good, with relatively high trading volumes allowing investors to enter and exit flexibly.

The market capitalization of Al Rajhi Takaful Company is approximately SAR 8.03 billion according to the latest data, calculated by multiplying the number of outstanding shares by the stock price. This classification places the company in an advanced position among cooperative insurance companies in the Kingdom. As for the P/E ratio, it is one of the most important valuation indicators considered by investors. With the significant drop in the stock price in 2024 and the increase in the company's profits in 2023, the P/E ratio has become relatively lower compared to periods of price increases, which may indicate an attractive valuation from a financial analysis perspective. However, it is important to note that the insurance sector is characterized by profit volatility due to operational variables and technical reserves, so the P/E ratio is variable and may not always be low. It is essential to monitor the company's official updates regarding profits and quarterly reports for an accurate assessment of the P/E ratio and stock performance.

Al Rajhi Takaful Company follows a cautious financial policy regarding profit distribution. The company often prefers to enhance reserves and financial solvency over distributing periodic cash dividends, which aligns with regulatory requirements and ensures coverage of insurance obligations. In December 2023, the company decided to distribute bonus shares (free shares) instead of cash distribution, which contributed to increasing capital and the number of outstanding shares. Additionally, the board of directors approved in June 2025 the buyback of up to 300,000 shares from the market as treasury stock, a measure often aimed at supporting the stock price or benefiting from the stock's low valuation. These policies indicate the company's focus on sustainable growth and strengthening its financial position rather than achieving short-term profits for shareholders.

The insurance sector is a vital part of the Saudi economy, with continuous growth driven by increased insurance awareness and the Vision 2030 projects. Dozens of cooperative and commercial insurance companies operate in the Saudi market, with regulatory authorities imposing strict standards on financial solvency and corporate governance. Al Rajhi Takaful falls within cooperative insurance companies, granting it the advantage of operating according to Sharia law and attracting a broad customer base. The company faces strong competition from firms such as Cooperative Insurance (8010), Bupa Arabia, Malath, and others. Al Rajhi Takaful derives a competitive advantage from its association with Al Rajhi Bank and the widespread distribution of its products in the market, in addition to its ability to provide comprehensive insurance solutions for individuals and businesses. However, it must continue to improve its operational efficiency and develop its digital products to keep pace with sector transformations.

Al Rajhi Takaful faces key competitors in the Saudi market, including Cooperative Insurance (8010), Bupa Arabia, Malath Insurance, and Al-Dar Al-Arabiya. These companies compete in offering diverse insurance packages, including health, vehicle, property, and specialized insurance for individuals and businesses. Al Rajhi Takaful's competitiveness stands out in its ability to attract Al Rajhi Bank customers and diversify its products to meet local market needs. On the other hand, competing companies focus on enhancing their digital services and providing flexible and rapid solutions for customers. Each company's market share is affected by its geographical coverage, the strength of its banking network, the quality of customer service, and the strength of its brand. In light of increasing competition, the importance of innovation and digital transformation emerges as key success factors for leading companies in the sector.

Al Rajhi Takaful has witnessed several significant developments during 2024 and 2025. The global rating agency S&P confirmed the company's rating at 'A-' with a stable outlook, reflecting the company's strong financial position and the confidence of financial institutions in it. Additionally, the company signed a key contract in March 2025 with Al Rajhi Bank to provide insurance coverage for real estate financing customers, enhancing its customer base and increasing written premiums. In terms of capital actions, the board approved a share buyback to support the stock price or take advantage of its low valuation. The company is preparing to announce financial results for the upcoming quarters, with expectations of continued growth in insurance revenues and improved profitability, despite market challenges. The board continues to focus on expanding new products and enhancing customer experience, in line with the objectives of Vision 2030.

Al Rajhi Takaful stock features good liquidity in the Saudi market, with a trading volume over the last three months of about 203 million shares, valued at nearly SAR 21.23 billion. These figures reflect relatively high activity in trading the stock, facilitating institutional and individual investors in executing buy and sell transactions without significantly impacting the stock price. High liquidity is a positive factor as it provides a high degree of flexibility and reduces the risks of price gaps. However, it should be noted that the stock's liquidity is affected by general market trends and significant events related to the company or sector, so it is always recommended to monitor daily trading volumes to track liquidity changes.

Al Rajhi Takaful has maintained a high credit rating from global rating agencies, with S&P confirming its rating at 'A-' with a stable outlook. This rating reflects the company's ability to meet its insurance obligations and the strength of its financial reserves. Additionally, a high credit rating contributes to reducing the company's financing costs and helps enhance investor and financial institution confidence. Furthermore, the credit rating is a crucial factor when making decisions for business partners and key clients, especially government institutions and major companies. It is important to monitor any future updates in the rating, as changes can affect the company's market image and cost of capital.

Despite the advantages of the cooperative insurance sector in Saudi Arabia, investing in insurance company stocks, including Al Rajhi Takaful, carries several risks. Among the most prominent of these risks are profit volatility due to changes in insurance claims, regulatory changes that may impose higher reserve requirements or adjustments to products. Additionally, intense competition in the sector puts pressure on profit margins, along with general market risks such as economic fluctuations and interest rates. On the other hand, companies may be affected by changes in customer trends or the emergence of new types of risks (such as natural disasters or health changes). Therefore, it is essential to study financial reports, follow regulatory news, and analyze sector performance before making any investment decision.

The Saudi insurance sector is witnessing a rapid digital transformation, with electronic services and smart applications becoming an essential part of the customer experience. Al Rajhi Takaful offers integrated digital solutions that allow its customers to manage insurance documents, renew them, and pay premiums electronically, in addition to rapid claims services online. Digital transformation enables the company to improve operational efficiency, reduce costs, and increase customer satisfaction. These trends also enhance the company's competitiveness, especially against competitors who are heavily investing in modern technologies. As the digital infrastructure in the Kingdom continues to evolve, technology is expected to play an increasingly significant role in the growth of the insurance sector and the improvement of services provided to customers.

Regulatory authorities, especially the Saudi Arabian Monetary Authority, place utmost importance on the financial solvency of insurance companies. Al Rajhi Takaful is committed to maintaining strong technical and financial reserves to ensure its ability to meet all insurance obligations to customers. Recent financial reports indicate a continuity in strengthening reserves and allocating sufficient ratios to cover future risks. This approach enhances the company's stability and provides it with the ability to face sudden financial shocks or increased insurance claims. Additionally, strong solvency contributes to maintaining the company's credit rating and supports its expansion plans in the market.

Al Rajhi Takaful adopts sustainability and social responsibility principles within its corporate strategy. The company dedicates resources to support community initiatives and enhances customer awareness of the importance of insurance in protecting individuals and society. The cooperative insurance model is fundamentally based on solidarity and cooperation, aligning with social and religious values in the Kingdom. The company also contributes to educational programs on health and financial insurance and supports public health initiatives. These efforts enhance the company's image in the market and help build long-term relationships with customers.