Arab Insurance Stock: Financial Performance and Market Developments

Arab Cooperative Insurance Company was established under Saudi cooperative insurance law and provides its services according to Islamic solidarity principles. The company focuses on insurance against risks related to property, real estate, machinery, marine insurance, and health insurance. Its commitment to Islamic Sharia principles is one of its distinguishing features in the local market. The company is listed on the main index of Tadawul, reflecting its importance in the Saudi insurance sector. It is also subject to strict supervision by the Saudi Arabian Monetary Authority (SAMA) and adheres to regulatory standards for competition and financial discipline.

Arab Insurance stock trades under the symbol (8180) in the Saudi financial market (Tadawul). The stock price has shown relative stability around levels of 10.7–10.8 Saudi Riyals during 2025, with some natural fluctuations related to the company's results and earnings announcements. The company's capital reached 1,078 million Riyals, bringing its market value to approximately 568 million Riyals. The stock's performance is clearly affected by quarterly profits, rising claims, and developments in the insurance sector as a whole. Notably, exceptional events such as the settlement of the Dhahran Mall fire claim have directly impacted the company's results and stock price. It is worth mentioning that Arab Insurance stock features good liquidity compared to some smaller companies in the sector, making it a subject of continuous monitoring by investors.

Financial data for 2024 showed that the company achieved net profits before zakat of 30.1 million Saudi Riyals, representing a 50% decrease compared to the previous year. In the first half of 2025, net profits fell to 9.6 million Riyals, a decline of 55% compared to the same period in 2024. Considering the current market value (~568 million Riyals), the price-to-earnings (P/E) ratio is estimated at around 18-19 times. The company has not announced any cash dividends for 2024 and 2025, as it focuses on supporting capital and addressing operational challenges. This approach is common among Saudi insurance companies facing rising claims and high price competition.

The profitability of Arab Insurance stock is influenced by several key factors, most notably the volume of claims (especially in health and auto insurance), the amount of premiums collected, and operating costs. Additionally, intense competition in insurance prices compresses profit margins. The company has faced significant challenges in 2024 and 2025 due to rising claims, including the massive settlement of the Dhahran Mall claim. On the other hand, general economic conditions and government policies (such as mandatory health insurance) impact the company's business volume. Regulatory changes and SAMA requirements impose additional capital and liquidity obligations.

The Saudi insurance sector includes more than 30 companies and is subject to strict regulation by the Saudi Arabian Monetary Authority and the Capital Market Authority. The sector features major companies such as Cooperative Insurance, Bupa Arabia, Malath, National, and MedGulf, alongside medium and small companies. Competitive challenges arise from companies racing to offer lower prices, which compresses profit margins and increases the importance of risk management. Regulatory authorities encourage mergers to enhance efficiency and financial sustainability, as seen in the merger memorandum between Arab Insurance and United. Government policies play a role in the sector's growth, especially with mandatory health insurance and expanding coverage for foreign labor.

In mid-2025, Arab Insurance Company signed a non-binding memorandum of understanding with United Insurance Company to explore the possibility of a merger. This step aims to enhance the market power of both companies, improve operational efficiency, and reduce administrative costs. Arab Insurance appointed Al-Bilad Financial as a financial advisor for the deal, with regulatory procedures expected to be completed before the end of 2025. If the merger occurs, it could create a larger, more competitive entity, improve capital levels and financial solvency, as well as expand the customer base and diversify products. However, regulatory approval remains a necessary step before final execution.

In August 2025, Arab Insurance announced the settlement of the Dhahran Mall fire claim worth 250 million Riyals with Cinemacity Centers. This settlement resolved a significant dispute that had a direct impact on the company's results, affecting third-quarter profits and depleting part of the reserves. This incident reflects the importance of effective risk management in the insurance sector and illustrates the challenges faced by companies when exposed to large claims. It highlights the necessity of having sufficient reserves and accurate underwriting policies to ensure the company's sustainability in the face of such events.

Arab Insurance recorded net profits in the first quarter of 2025 amounting to 4.4 million Riyals (a 43% decrease from the same quarter in 2024), and in the second quarter, 5.1 million Riyals (a 61% decrease). Total profits for the first half reached 9.6 million Riyals. The fourth quarter of 2024 saw an operating loss of 4.5 million Riyals. These figures reflect competitive pressures and rising claims, in addition to the impact of major settlements such as the Dhahran Mall incident. Management continues to implement plans to reduce costs and enhance operational efficiency to address these challenges.

Arab Insurance focuses on enhancing capital levels by reinvesting profits to support reserves and improve financial solvency. The company's policy tends to avoid cash dividends under pressured financial conditions, preferring instead to invest in product development, improve technical infrastructure, and explore new investment opportunities such as increasing its stake in Najm Insurance Services. This strategy helps to mitigate market volatility and maintain financial flexibility, enabling the company to absorb any emergencies or large claims.

Arab Insurance competes with several major companies such as Cooperative Insurance, Bupa Arabia, Malath, National, and MedGulf. These companies differ in capital size, insurance specialties, and product distribution. The P/E ratio of Arab Insurance stock (18-19 times) is within the average range compared to the Saudi insurance sector, which often hovers in the mid-twenties. Dividend policies and risk levels also vary among companies. Competition is particularly fierce in health insurance and vehicle insurance, which constitute a significant portion of insurance premiums in the Kingdom.

The Saudi Arabian Monetary Authority and the Capital Market Authority play a pivotal role in regulating the insurance sector by setting minimum capital standards, monitoring reserve adequacy, and protecting consumer rights. Regulatory bodies encourage the merger of small and medium-sized companies to increase efficiency and reduce market fragmentation. New laws impose ongoing obligations on insurance companies to develop their products and ensure comprehensive coverage, which reflects on companies' strategies in risk management and investment.

Arab Insurance has not announced any cash dividends for 2024 and 2025. This is due to the company's policy of focusing on supporting capital and financial reserves to address high claims and sector volatility. Given the decline in profits and the increase in major financial settlements, the company prefers to maintain liquidity and improve solvency indicators. The possibility of future distribution remains contingent on the improvement of the company's profitability and stability of its financial results in upcoming periods, and the general assembly may consider distribution upon performance improvement.

Arab Insurance experienced significant events during 2024-2025, including: signing a memorandum of understanding for merger with United, appointing a financial advisor for the deal, settling the Dhahran Mall fire claim, and declining quarterly profits. These developments directly affect investor confidence and expectations regarding the future performance of the stock. They also reflect the company's readiness to adapt to sector changes and strive to improve operational efficiency through studied merger and investment strategies.

The Saudi insurance sector is witnessing a rapid trend towards mergers and enhanced efficiency, supported by encouraging government and regulatory policies. As competition continues and products diversify, the future of Arab Insurance stock depends on its ability to manage risks, improve operational performance, and seize expansion opportunities through alliances or acquisitions. Additionally, the stability of profitability indicators and the success of any merger plan with United could open new avenues for growth, necessitating regular monitoring of sector developments.