Allianz Saudi French: Comprehensive Analysis of Performance and Saudi Financial

Allianz Saudi French Cooperative Insurance was established in the past decade through a strategic partnership between the global Allianz Group and the Saudi French Bank, one of the prominent local banks. Since its inception, the company has adopted the cooperative insurance model in line with the regulations of the Saudi financial market, which mandates the distribution of operational surplus after settling claims and expenses among policyholders and shareholders according to specified ratios.

Allianz Saudi French operates as a publicly traded joint-stock company in the Saudi financial market (Tadawul) and is subject to the supervision of the Saudi Arabian Monetary Authority (SAMA) and the Capital Market Authority, with a strict commitment to governance and transparency standards. The company offers a wide range of insurance solutions that meet the needs of individuals and businesses, such as health insurance, vehicle insurance, property insurance, engineering insurance, and various commercial insurances.

This cooperative model grants the company a distinguished position in the sector, focusing on protecting the rights of all parties, enhancing financial strength, and providing Sharia-compliant products. As legislation continues to evolve and the economy diversifies under Vision 2030, the company has emerged as one of the pillars of the Saudi financial sector, contributing to increasing insurance penetration rates and deepening financial literacy among individuals and institutions.

Allianz Saudi French is licensed as a joint-stock company and operates under the supervision of the Saudi Arabian Monetary Authority (SAMA), the regulatory body for the insurance sector in the Kingdom. The cooperative insurance system mandates all companies to redistribute operational surplus among policyholders or shareholders after deducting claims and expenses, in accordance with Sharia and regulatory guidelines.

The company operates within a framework of strict governance, adhering to periodic disclosures of its financial results, advanced risk management mechanisms, and compliance with International Financial Reporting Standards (IFRS 17), which the Kingdom has recently started implementing. This regulatory environment supports the stability of the sector while encouraging major companies like Allianz Saudi French to strengthen their financial position by increasing reserves, improving claims management, and developing products, positively reflecting on the level of trust and transparency in the market.

The legal framework requires the company to comply with minimum capital requirements, governance controls, periodic disclosures, and appoint independent directors on the board, enhancing decision-making independence and protecting the interests of all stakeholders.

Allianz Saudi French experienced continued growth in total written premiums in 2024, supported by an expanding customer base and rising demand for health and vehicle insurance due to government initiatives mandating compulsory insurance. According to announced data, written premiums exceeded one billion riyals in 2023, with continued growth into 2024. Regarding net profit after zakat and tax, the company recorded significant growth exceeding X% year-on-year based on fourth-quarter 2024 results, supported by improved claims ratios and the employment of advanced pricing systems.

The financial results were also impacted by the implementation of the IFRS 17 accounting standard, which required larger financial reserves to cover future claims, slightly affecting short-term profits but enhancing the sustainability of the financial position. The company also showed improvement in its solvency ratio, with reserves exceeding regulatory requirements, positively reflecting on its ability to face future risks. The company is expected to continue this upward performance in 2025, focusing on digitization and expanding market share.

Allianz Saudi French's stock is traded within the insurance sector on the Saudi financial market (Tadawul), and the stock experiences natural fluctuations related to the company's performance and sector news. At the end of 2023, the share price hovered around 10 riyals, and at the beginning of 2025, the stock closed at similar levels with some limited fluctuations.

The company's market value is calculated by multiplying the share price by the number of outstanding shares, estimated in hundreds of millions of riyals based on the share price and the number of shares traded. The price-to-earnings (P/E) ratio reflects market expectations for the company's earnings growth and typically ranges from medium to high compared to the sector average, due to financial stability and profit growth.

Regarding cash distributions, the company does not rely on a large annual dividend policy due to the nature of cooperative insurance, where surplus is redistributed to policyholders or used to bolster financial reserves. This model ensures capital sustainability and meets obligations to clients. Other financial indicators, such as the loss ratio, stand at competitive levels (60-70%), reflecting effective risk management.

The Saudi insurance sector is one of the largest financial sectors in the region, supported by rapid economic growth and government initiatives to increase insurance penetration and enhance financial literacy. Written insurance premiums in the Kingdom have exceeded several billion riyals annually, predominantly in health and vehicle insurance due to legal mandates.

Allianz Saudi French operates in a competitive environment that includes major companies such as Tawuniya Insurance (8010), Walaa Insurance (8200), Malath Insurance (8020), Al-Durra Arab Shield, Saudi Re (8200), and Bupa Arabia, among others. These companies compete in providing comprehensive insurance solutions for individuals and businesses, with an increasing focus on developing digital services and expanding partnerships with banks and medical facilities.

Companies face regulatory and technical challenges, such as increased capital requirements, the application of IFRS 17, and adopting smart pricing models. However, major companies like Allianz Saudi French benefit from strong capital, institutional support, and global expertise, positioning them competitively within the sector.

The company witnessed a significant strategic development in 2023-2024, represented by the sale of 51% of Allianz Group's stake in Allianz Saudi French to Abu Dhabi National Insurance Company (ADNIC). The transaction was completed in April 2024, resulting in ownership being distributed between ADNIC (51%) and the Saudi French Bank (49%).

This change in ownership structure is expected to inject new financial resources and enhance the company's expansion capabilities, benefiting from ADNIC's network and expertise in regional markets. The parties confirmed that the deal would contribute to enhancing the company's competitiveness, increasing market share, and developing innovative insurance products while maintaining operational stability thanks to the continued strong local partner (Saudi French Bank).

The new partnership is also expected to support digital strategies, expand services, and delve deeper into corporate and commercial insurance sectors, leveraging government initiatives to achieve Vision 2030.

The International Financial Reporting Standard IFRS 17 came into effect in the Kingdom at the beginning of 2023, fundamentally changing how revenues and reserves are calculated in insurance companies. The new standard requires recognizing the necessary provisions over the life of insurance contracts, often leading to increased financial reserves and temporarily reducing recorded profits.

In the case of Allianz Saudi French, the company responded quickly by enhancing liquidity and increasing capital in preparation for IFRS 17 requirements, issuing clear disclosures about the standard's impact on its financial results. This has contributed to increasing investor confidence, reflecting the company's ability to adapt to regulatory changes and enhance transparency.

In the long term, the implementation of IFRS 17 is expected to raise the quality of financial reporting, support sustainable growth, and enhance the performance of companies with strong risk management and pricing systems, such as Allianz Saudi French.

Allianz Saudi French offers a wide range of insurance products designed to meet the needs of individuals and businesses. Among the most prominent are:

- Health insurance for individuals, families, and companies, with flexible coverage and a wide network of medical service providers.
- Vehicle insurance (mandatory and comprehensive), with programs to protect customers from potential risks.
- Property and industrial and commercial facility insurance against fire, theft, and natural disasters.
- Engineering insurance, such as contractor insurance, construction defects, and heavy equipment.
- Commercial insurance: liability insurance, professional liability, and travel insurance.

The company relies on advanced digital solutions to facilitate issuance processes, document management, and claims settlement quickly and transparently, while continuously developing new products such as electronic insurance and innovative protection solutions for modern sectors.

Allianz Saudi French keeps pace with global and local trends toward digitization by launching smart mobile applications and developing online platforms for managing insurance documents and electronically settling claims. It also works to enhance partnerships with fintech companies (InsurTech) to provide innovative solutions in areas such as digital insurance, cyber protection, and smart travel insurance.

The company aims to provide seamless and efficient customer experiences, reducing paperwork and facilitating the acquisition of quotes and issuance of documents digitally. These initiatives support the company's plan to increase its market share, especially among youth and startups that prefer digital interactions.

Innovation in products includes offering new coverages that align with evolving risks, such as insurance against cyberattacks or flexible products for small and medium enterprises, enhancing the company's competitiveness in the market.

Allianz Saudi French adheres to the highest governance standards, with a board of directors comprising independent members, separating ownership from management and execution, ensuring objective decision-making in the interest of all parties. The company relies on a clear organizational structure and is committed to periodic disclosures of its financial results and operational policies, in accordance with the requirements of the Capital Market Authority and SAMA.

The application of governance includes risk management, compliance with local and international regulations, and training employees on best practices in combating corruption and enhancing corporate integrity. The company also continuously updates internal policies to respond to regulatory changes, such as the new governance regulations announced in 2024.

These efforts enhance customer and shareholder trust, provide an attractive work environment for talents, and support long-term sustainable growth.

The strategy of Allianz Saudi French aligns with the goals of Vision 2030, which focuses on diversifying the economy, enhancing the financial sector, and increasing insurance rates among citizens and residents. The vision has contributed to mandating health and vehicle insurance and expanding insurance coverage to include industrial, engineering, and professional facilities.

The company benefits from this supportive environment by increasing its customer base, expanding its partnership network with the public and private sectors, and developing specialized products that meet the needs of the new economy. It also contributes to raising insurance awareness through educational campaigns and advanced customer services.

Regulatory authorities continue to update regulations to encourage innovation, raise capital requirements, and stimulate mergers among smaller companies, supporting sector stability and enabling major companies like Allianz Saudi French to achieve further growth and expansion.

Allianz Saudi French enjoys a strong reputation in the financial market, supported by its financial record, high solvency, and previous global experience with Allianz. Although no recent detailed rating has been issued by major rating agencies following the ADNIC deal, the Saudi insurance sector generally receives positive ratings from agencies such as Fitch and Standard & Poor's.

Before transitioning to ADNIC, the company received strong ratings (A), reflecting the quality of asset and reserve management. Analysts expect the rating to remain stable or improve, especially with the entry of a significant regional partner like ADNIC and increased capital. These ratings positively influence investor confidence and support the company's ability to expand and attract new clients, particularly from large institutions seeking long-term insurance stability.

Allianz Saudi French faces promising opportunities amid growing demand for health and vehicle insurance, expansions in industrial and commercial sectors, and government initiatives to enhance transparency and digitization. The expanding customer base, evolving digital services, and the entry of a new strategic partner all support the company's growth.

However, there are challenges such as fierce competition from major companies, increasing capital requirements, changing regulatory frameworks, and operational risks such as rising claims or cyber risks. The company's success in the upcoming phase depends on its ability to innovate, improve risk management, and develop products that align with changing market needs.

The insurance sector in Saudi Arabia remains a dynamic field requiring continuous monitoring of performance and regulations, with the importance of consulting a licensed financial advisor before making investment decisions or purchasing insurance policies.