Brouj Cooperative Insurance: Comprehensive Financial Analysis

Brouj Cooperative Insurance is a Saudi joint-stock company established to provide cooperative insurance services in the Kingdom of Saudi Arabia. The company operates under the regulations of the Saudi Arabian Monetary Authority (SAMA) and is supervised by the Capital Market Authority. Brouj was founded to meet the needs of individuals and businesses in health insurance, vehicle insurance, and general and engineering insurance. Since its establishment until 2025, the company has focused on offering Sharia-compliant insurance products under the cooperative system, which is the applicable system in the Kingdom. The company's capital reached approximately 100 million Saudi Riyals, distributed over 10 million shares with a nominal value of 10 Riyals per share. The company has maintained its capital structure without significant changes until the recent merger. Brouj has distinguished itself by its flexibility in responding to market demands and its orientation towards digital transformation and product development, with a focus on compliance with laws and transparency in financial disclosure.

Brouj Cooperative Insurance operates in several insurance sectors, most notably health insurance for individuals and businesses, offering various programs that cover basic and advanced treatments, in compliance with the mandatory health insurance policies in the Kingdom. Additionally, the company provides vehicle insurance, a product that enjoys high demand due to the prevalence of cars and the need for individuals and businesses for this type of protection. In the area of engineering and general insurance, Brouj offers solutions to cover construction projects, property insurance against various risks, and insurance against fire and theft. The company relies on a professional marketing and distribution team and uses digital channels to facilitate underwriting processes and provide services to its customers. This diversity in products has helped Brouj build a diverse customer base, despite the competitive challenges in the market.

Brouj Cooperative Insurance is committed to all regulations issued by the Saudi Arabian Monetary Authority (SAMA) and the Capital Market Authority, including financial disclosure requirements, sound governance standards, and anti-money laundering procedures. The company subjects its operations to periodic audits and is committed to forming independent internal audit committees to ensure transparency and protect shareholder rights. The company also adopts clear policies in risk management, especially regarding pricing insurance products and calculating adequate technical reserves to meet future claims. These policies enhance customer and shareholder confidence and support the company's ability to adapt to any regulatory changes or capital requirements that may be imposed by regulatory authorities in the future.

Brouj Cooperative Insurance's capital in 2024 was approximately 100 million Saudi Riyals, distributed over 10 million shares. The company did not witness significant capital increases during 2024-2025. Financially, Brouj's results in 2024 showed a notable decline in profitability, with a net annual profit of 9.38 million Riyals, a decrease of 53% from the previous year. For the first quarter of 2025, net profit dropped to only 1.3 million Riyals, followed by a second quarter with a net profit of 1.5 million Riyals. These figures indicate that the company faced pressure on profit margins due to rising operating expenses and claims compensation. Revenues remained relatively stable without significant growth, reflecting a challenging competitive environment and increased underwriting and reinsurance costs. Regarding cash distributions, the company has not announced any distributions in recent years, and the cash yield for shareholders remained at 0%.

Before Brouj's merger with Medgulf in October 2025, Brouj's shares traded within moderate ranges, fluctuating between approximately 3-5 Riyals per share. The number of issued shares was 10 million, making the company's total market capitalization range in the hundreds of millions of Saudi Riyals. Daily trading volume was relatively limited compared to major companies in the insurance sector, reflecting the company's small size and limited liquidity. After the completion of the merger with Medgulf, the shares were delisted and no longer had an official trading price. Brouj shareholders became shareholders in Medgulf according to the exchange ratios specified in the merger deal, making Brouj part of a larger entity with greater competitive capabilities in the Saudi market.

Brouj's financial results in 2024 showed a significant decline in profits, with annual net profit dropping by 53% to reach 9.38 million Riyals. In the third quarter of 2024, net profit was only 0.61 million Riyals, while nine months recorded 7.8 million Riyals. At the beginning of 2025, profit pressures continued, with net profit for the first quarter at 1.3 million Riyals (a 66% annual decline), and for the second quarter at 1.5 million Riyals. This decline is attributed to several factors, most notably increased claims provisions, rising operating costs, and reinsurance expenses. The slowdown in revenue growth also affected profit margins, especially amid intense competition and a general decline in profits in the Saudi insurance sector during the same period. These financial indicators emphasize the importance of closely monitoring the company's performance, especially after its transition to the larger Medgulf entity.

The Saudi insurance sector is one of the vital financial sectors in the Kingdom, comprising over 30 insurance, cooperative, and reinsurance companies. The Saudi market is characterized by a high competitive environment, with major companies such as Bupa Arabia, Cooperative Insurance, Medgulf, Malath, Salama, and others. The sector witnessed a notable decline in profits during 2024-2025, with net profits of listed insurance companies dropping by 27% in the first quarter of 2025 compared to the same period in 2024, and net profits for six months reaching 1.37 billion Riyals (a decline of 38%). These pressures are attributed to rising health insurance claims, increased underwriting costs, and new regulatory requirements from SAMA and the Capital Market Authority. The market is also witnessing trends toward mergers and acquisitions to strengthen financial power and competitive capability, as seen with the merger of Brouj and Medgulf.

Brouj Cooperative Insurance competes with major companies in the Saudi market, led by Bupa Arabia, which holds about 22% of total insurance premiums, followed by Cooperative Insurance, Medgulf, Malath, Salama, and National. These companies boast a wide customer base and strong financial positions, giving them a competitive advantage in pricing and product development. Nevertheless, Brouj has managed to establish its presence in certain sectors such as health and vehicle insurance. Intense competition has pressured the profit margins of small and medium-sized companies, pushing them to seek merger or strategic partnership opportunities to enhance financial capacity and geographic expansion. This has led Brouj to pursue a merger with Medgulf in 2025, aiming for greater efficiency and expanding its customer and product base.

During 2024 and 2025, Brouj Cooperative Insurance experienced significant developments that impacted its market position. Among the most notable developments was the announcement of declining annual and quarterly profits, due to increased operating expenses and rising claims. In October 2025, the company announced the completion of the merger with Medgulf, following the approval of shareholders from both companies, which led to Brouj's shares being delisted from trading in the Saudi financial market. The merger came as part of a general trend in the Saudi insurance sector towards consolidation and mergers to form stronger entities capable of facing market and regulatory challenges. The market also experienced continued profit pressures during this period, along with the implementation of new regulatory policies related to mandatory health insurance and capital requirements.

On October 26, 2025, shareholders of Brouj Cooperative Insurance and Medgulf approved a strategic merger deal aimed at forming a new, stronger, and more efficient entity in the Saudi market. Under the deal, Brouj shareholders became shareholders in Medgulf according to the agreed-upon exchange ratios. Medgulf increased its capital to accommodate Brouj's shares, with the possibility of offering priority rights to raise necessary funding. The goal of the merger is to achieve economies of scale, expand the customer base, and benefit from the integration of products and services. Brouj's shares are no longer traded independently following the execution of the deal. For former Brouj shareholders, the merger means transitioning to a larger company with better prospects for benefiting from the future growth of the merged entity.

The Saudi insurance sector, and Brouj in particular, faces several key risks, including rising claims costs, pricing pressure from intense competition, and changes in the regulatory environment such as capital requirements or new mandatory coverages. Economic factors such as inflation and changing unemployment rates also affect the ability of individuals and businesses to purchase insurance products. Conversely, future opportunities include increased demand for health insurance, continued expansion in government and construction projects, and digital transformation that could enhance operational efficiency and reduce costs. The merger of Brouj with Medgulf provides an opportunity to benefit from greater financial strength and product diversity, which may enhance the new entity's ability to grow and face future challenges.

Insurance companies in Saudi Arabia are influenced by various government trends and policies, most notably the mandatory health insurance for all private sector workers and the expansion of insurance coverage for major projects. Regulatory bodies such as SAMA and the Capital Market Authority are working to raise disclosure standards, enhance governance, and impose higher capital requirements to ensure the stability of companies. The government is also pushing for digital transformation in the insurance sector to facilitate customer services and reduce operational costs. These policies create a more competitive working environment and encourage mergers and acquisitions to form entities capable of complying with new standards and achieving sustainable growth.

The Saudi insurance sector witnessed a decline in profits during 2024-2025 due to rising claims and operating costs, which reflected on the performance of Brouj Cooperative Insurance. The average price-to-earnings ratio for the Saudi insurance sector reached moderate to high levels, with a decline in company valuations compared to previous years. The average cash distribution yield in the sector decreased as most companies moved to reduce or suspend distributions to maintain liquidity. In this environment, the importance of studying the financial indicators of each company individually emerged, focusing on management's ability to handle challenges and achieve integration after mergers. The success of merged entities, such as the Brouj and Medgulf merger, depends on management's efficiency in achieving economies of scale and smoothly integrating operations.