Arab Shield Insurance Company: Financial Performance and Sector Analysis

Arab Shield Cooperative Insurance Company was established under the Saudi Cooperative Insurance Law and is a publicly traded company listed on the main market (Tadawul) under the symbol (8070). The company offers a wide range of insurance products including health insurance, vehicle insurance, comprehensive insurance, and property insurance, as well as protection and savings solutions. The company is committed to the principles of cooperative work that characterize the Saudi insurance market, dedicating its efforts to providing reliable services that meet the needs of individuals and businesses. The company relies on a cooperative approach, which reflects on the distribution of surpluses and achieving a balance between the interests of shareholders and policyholders. It is keen to comply with the regulatory standards issued by the Saudi Capital Market Authority, which enhances the transparency of its operations and earns the trust of a wide segment of customers and investors.

The financial results of Arab Shield Insurance Company in 2024 showed a significant improvement compared to the previous year, achieving a net profit of approximately 71 million Saudi Riyals, representing a growth of nearly 6% over 2023. However, the end of the year brought some challenges, as the company incurred a loss of 5.9 million Riyals in the fourth quarter. At the beginning of 2025, the company recorded a sharp decline in profitability, with a net profit for the first quarter of only 6.5 million Riyals, a decrease of 73% compared to the same period last year. This decline reflects the fluctuations in the Saudi insurance market and the increase in claims, in addition to the volatility in investment returns. These indicators emphasize the importance of risk management and improving operational efficiency in a highly competitive environment with increasing regulatory pressures.

The share price of Arab Shield Insurance Company has been significantly affected by changes in financial results and overall sector performance. The share price ranged between 72.90 Riyals (the highest in 52 weeks in December 2024) and 37.10 Riyals (the lowest in June 2025). The market capitalization of the company fluctuates according to the number of issued shares and trading price, typically estimated at several billion Saudi Riyals. The price-to-earnings (P/E) ratio rose amid profit volatility, recording about 70 times in 2024 based on estimated earnings per share and trading price, reflecting the high market valuation of small and medium insurance companies in the Kingdom. As for cash distributions, the company decided to freeze dividend distribution for 2024 to enhance its financial solvency, after having distributed partial dividends in 2023. This decision is part of capital management and a hedge against market fluctuations.

The insurance sector in Saudi Arabia is witnessing strong competition among more than 30 companies, with operations varying between cooperative and takaful insurance. Cooperative, Wafa, Gulf United, and Malath are among the main competitors, alongside companies specialized in reinsurance. The sector experienced significant growth until 2022, then faced a slowdown in profits during 2023-2025 due to rising claims and market changes. Arab Shield occupies a medium position in terms of market share and is working to compensate for the size gap with larger players by developing digital products and improving services. Its commitment to international standards such as IFRS 17 enhances its competitiveness in a changing market that requires high flexibility and rapid response to regulatory developments.

Arab Shield Insurance Company aims to strengthen its financial position by controlling expenses and improving operational efficiency, especially following the decision to freeze dividend distribution for 2024. The company is working to expand its digital services to meet customer needs in the digital age and is looking to invest in developing innovative products and expanding into health insurance and remote insurance. It also aims to improve its investment returns and diversify income sources, focusing on risk management and meeting solvency requirements under new regulations. The company is also considering regulatory changes in the Saudi market and seeks to increase supporting capital and improve the quality of its investment portfolio.

Insurance companies in Saudi Arabia have undergone significant regulatory changes in recent years, most notably the implementation of the global IFRS 17 standard, which has affected the way revenues and expenses are recognized and made financial reserve requirements more stringent. Additionally, the Capital Market Authority and the Saudi Insurance Authority impose strict oversight on solvency ratios, pushing companies to enhance their capital or adjust underwriting policies. For Arab Shield, these changes necessitate strengthening financial reserves and reviewing pricing strategies and claims management to ensure financial sustainability and comply with regulatory requirements.

Arab Shield Insurance Company places increasing importance on digital transformation in insurance services, in line with a general trend in the Saudi market towards automation and facilitating access to products through electronic platforms. The company has launched several initiatives to develop mobile applications and improve user experience in purchasing, renewing policies, and managing claims remotely. This approach helps reduce operational costs and increase operational efficiency, enhancing the company's attractiveness to young and digital-savvy customers. Furthermore, digital transformation contributes to enhancing transparency and responsiveness to market demands, which are critical factors in the competitiveness of modern insurance companies.

Risk management is a core focus in the operations of insurance companies, especially with rising claim rates in certain branches during 2024-2025. Arab Shield is working to develop precise underwriting policies and set adequate technical provisions to meet future claims. It is also keen to improve risk assessment processes through modern technologies and leverage big data to analyze customer behavior and accident patterns. Efficient claims management and the quality of services provided to customers are key factors in enhancing customer experience and reducing technical losses, which contributes to the sustainability of profits in the long term.

Arab Shield Insurance Company has made a strategic decision to freeze dividend distributions for 2024, despite achieving annual net profits. This decision aims to strengthen the capital base and enhance financial solvency, especially in light of the challenges faced by the sector recently. The company confirms that it will reconsider its distribution policy based on the results of the 2025 fiscal year and the improvement of operational indicators. The distribution policy in insurance companies typically relies on a delicate balance between providing returns to shareholders and ensuring coverage of future obligations, which requires strong financial governance and accurate forecasting of market requirements.

Compared to companies like Cooperative, Wafa, and Malath, Arab Shield shows fluctuating but acceptable financial performance considering its size and market share. Cooperative, the largest in the sector, offers regular dividends and stable growth supported by a wide customer base. Meanwhile, medium-sized companies like Arab Shield face challenges in increasing revenues and maintaining profitability amid intense competition. The company relies more on developing digital products and improving operational efficiency to enhance its market position. Its commitment to international standards and capital market laws boosts investor confidence, although profit volatility remains an ongoing challenge.

Detailed recent data on major shareholders in Arab Shield Insurance Company is not available, but ownership is typically distributed among investment funds, financial institutions, and individuals. The boards of directors play a pivotal role in shaping company policies, especially regarding dividend distribution and investment in digital operations. The presence of strategic shareholders contributes to financial stability and provides a base for supporting capital when needed. The company's success depends on management's ability to balance the interests of shareholders, policyholders, and regulatory requirements.

The results for the first quarter of 2025 showed a sharp decline in profitability for Arab Shield Insurance Company, with a net profit of only 6.5 million Saudi Riyals, down 73% from the same period in 2024. This is primarily due to increased insurance claims and declining investment returns, in addition to additional technical provisions imposed by regulatory requirements. This performance reflects the challenges facing the Saudi insurance sector amid economic fluctuations and rising medical costs and accidents. It highlights the importance of effective risk management and the need to adopt flexible strategies that enable the company to regain growth in the coming quarters.

To obtain the latest information about Arab Shield Insurance Company, it is recommended to follow the company's official website (der3.com) and the disclosure reports published on the Saudi financial market (Tadawul). Platforms like Argaam provide comprehensive coverage of news for listed companies, including financial results, general assembly decisions, and distribution news. Interested parties can also follow sector developments through reports from the Saudi Capital Market Authority and the Insurance Chamber, which periodically monitor legislative changes and market trends. Transparency in disclosing results and events is one of the factors that enhances investor and customer confidence in the company.