Medgulf Insurance: Comprehensive Guide to Financial Performance

Medgulf Insurance and Reinsurance Company (Medgulf) was established in 2007 as a Saudi joint-stock company, becoming one of the leading cooperative insurance companies in the Kingdom of Saudi Arabia. The company operates under the supervision of the Saudi Arabian Monetary Authority (SAMA) and the Cooperative Health Insurance Council, adhering to a cooperative insurance model compliant with Islamic Sharia provisions. Since its listing on the Saudi financial market (Tadawul) under the symbol 8030, Medgulf has solidified its position by offering a diverse range of insurance products that meet the needs of individuals, businesses, and institutions. Over the years, the company's portfolio has evolved to include health insurance, auto insurance, engineering insurance, commercial insurance, and property and project insurance. This diverse strategy has helped Medgulf enhance its market presence and keep pace with regulatory and economic changes in the Saudi financial sector. The company's commitment to quality and continuous development reflects its ability to adapt to market demands and competitive challenges, making it a reliable choice for a diverse customer base within the Kingdom.

In 2024, Medgulf experienced mixed financial performance, recording a notable growth in total written premiums, which reached approximately SAR 3.731 billion, an increase of 19% compared to 2023. This growth reflects the company's expansion in its customer base and increased demand for its products, particularly in the health insurance sector. Conversely, net premium revenues (after reinsurance) rose to SAR 3.552 billion (+6.6% from 2023), indicating an improvement in attracting new business and retaining existing customers. However, the company faced challenges related to rising reinsurance costs and loss ratios, leading to a decline in net profit before zakat and tax to about SAR 107.04 million compared to SAR 195.67 million in 2023 (a decrease of approximately 45%). The net profit after zakat and tax was SAR 101.99 million versus SAR 201.47 million in the previous year. Earnings per share (EPS) fell to SAR 0.97. These indicators show that while Medgulf managed to achieve revenue growth, it faced profitability pressures due to market factors and increased claims.

As 2025 commenced, Medgulf continued to face financial challenges that reflected in its interim results. Financial reports for the first half of 2025 indicate ongoing pressure on net profits, with the company recording net profits that were over 25% lower in Q1 compared to the same period in 2024. Challenges increased in Q2 with a recorded loss, bringing the total net profit in the first half to approximately SAR 18.2 million only. This decline is attributed to the high volume of insurance claims and rising operating expenses, along with changes in reinsurance prices. In this context, the company has moved to review its financial strategy and reduce some operating costs in an attempt to restore profitability levels. Such financial fluctuations are not unusual in the Saudi insurance sector, which is characterized by seasonal changes and intense competition, necessitating companies to adopt flexible financial policies and effective risk management.

Medgulf's stock (trading symbol: 8030) is among the active stocks in the insurance sector on the Tadawul Saudi market. The number of outstanding shares is approximately 105 million, with a price fluctuating around SAR 15 in mid-2024, placing the company's market capitalization at about SAR 1.575 billion. The price-to-earnings (P/E) ratio for the stock was approximately 15, based on 2024 earnings, meaning the stock is trading at 15 times the trailing earnings per share. Regarding dividends, the company did not announce a cash dividend for 2024 due to the decline in profits, while it distributed dividends in previous years when it achieved good financial results. The stock's performance is influenced by a range of factors, including quarterly business results, the level of competition in the insurance sector, and regulatory developments in the Saudi financial market. It is important to note that these indicators are subject to change with market conditions and the company's performance in upcoming periods.

Medgulf offers a comprehensive range of insurance products that meet the needs of both individuals and businesses. The company's portfolio focuses on four main areas:

1. Health Insurance: This constitutes the largest share of written premiums, with the company offering insurance policies for individuals and businesses that comply with the requirements of the Health Insurance Council, including various coverage for medical treatment and critical care services.
2. Auto Insurance: This includes comprehensive vehicle insurance against accidents, theft, and fire, in addition to third-party insurance, and is one of the regularly demanded products in the Saudi market.
3. Engineering and Commercial Insurance: This covers engineering project insurance, contracting, and professional liability, a growing sector with the expansion of infrastructure investment in Saudi Arabia.
4. Property and Liability Insurance: This includes coverage for risks faced by properties, factories, and commercial assets.

Medgulf continuously develops new products, such as collective health insurance for individuals and small and medium enterprises, and is keen to enhance customer experience by adopting modern technological solutions in service delivery and claims management.

In recent years, Medgulf has focused on developing its corporate structure and improving operational efficiency. Among the notable steps was the opening of a new central headquarters in Riyadh in mid-2024, reflecting the expansion of business volume and the company's desire to solidify its presence in the market. The company also underwent internal restructuring, which included establishing a dedicated department to follow up on medical insurance claims internally, contributing to reducing processing times and improving service quality. The company has adopted digital transformation strategies by developing electronic platforms that allow customers to purchase policies and track claims easily. Furthermore, Medgulf seeks to enhance operational efficiency by investing in training human resources and adopting business intelligence solutions to analyze data and improve pricing strategies and risk management. These steps aim to increase customer satisfaction and enhance the company's competitiveness against major players in the sector.

The Saudi insurance sector is witnessing continuous growth driven by government policies that encourage financial inclusion and raise insurance awareness, in addition to the implementation of mandatory health insurance. The sector includes more than 30 insurance companies operating under the supervision of the Unified Financial Sector Authority (SAMA). Companies in this sector face challenges, including heightened competition, regulatory changes, increasing claims pressure, and the need to invest in digital products and transformation technologies.

For Medgulf, it is considered one of the key players in the market, but it faces strong competition from companies such as Tawuniya Insurance, GIG, Malath Insurance, Bupa Arabia, and others. Competition is particularly fierce in health insurance and comprehensive project insurance, where each company seeks to enhance its market share through product development and quality improvement. Despite these challenges, Medgulf stands out with a diverse portfolio and an expansion strategy focused on innovation and international partnerships, giving it greater flexibility in facing changes.

In its efforts to strengthen its position in the Saudi insurance market, Medgulf has recently developed strategic partnerships and alliances with local and international insurance companies. Among the announced initiatives is negotiating with Chinese insurance companies to expand the programming of new products within the Kingdom and exchange technical expertise in risk management. Medgulf has also entered into partnerships with global reinsurance companies, allowing it to distribute risks and improve reinsurance terms. These alliances aim to enhance the company's ability to meet growing customer demands and develop specialized products that respond to local market needs, especially amid increasing competition and diverse customer needs. Collaboration with international entities also contributes to raising governance levels and adopting best global practices in insurance and reinsurance.

In recent years, the Saudi insurance sector has witnessed a wave of regulatory developments aimed at enhancing transparency, improving service quality, and increasing capital efficiency. Among the most notable developments is the implementation of the International Financial Reporting Standard IFRS 17 since 2023, which requires insurance companies to update revenue recognition methods and calculate reserves, directly impacting the financial statements of Medgulf and other companies. Additionally, SAMA has issued new requirements for reserve capital and internal control policies, imposed capital adequacy standards (IMS), and provided guidelines on pricing and risk management. Medgulf must comply with these regulatory requirements, necessitating additional investments in accounting and technical systems and enhancing compliance levels. Although these requirements may increase operational burdens in the short term, they contribute to enhancing trust and transparency in the long term and help protect the rights of policyholders and shareholders.

Like other insurance companies in Saudi Arabia, Medgulf faces a range of challenges that require effective management and quick responses. Among the most prominent challenges are the rising volume of insurance claims, particularly in health insurance with increasing medical spending, and intensified market competition. Continuous regulatory changes and compliance pressures also pose challenges for the company, in addition to the need to invest in digital transformation and product development.

On the other hand, promising growth opportunities are available, such as expanding digital products, health insurance for individuals and small and medium enterprises, and benefiting from Saudi Vision 2030 programs that support financial inclusion and innovation in the financial sector. Additionally, collaboration with global reinsurance companies and developing strategic partnerships gives Medgulf the ability to expand its operations and improve its risk management capabilities. The company's ability to respond quickly to these changes will be a crucial factor in enhancing its competitiveness and sustaining its growth.

Medgulf is committed to distributing a portion of its profits in cash to shareholders when it achieves sufficient profits, according to a policy approved by the company's general assembly. In years when the company performs well financially, it typically recommends annual dividends to shareholders. However, in 2024, with the sharp decline in profits, the company did not announce a recommendation to distribute dividends until mid-2025, a step consistent with the practices of cooperative insurance companies in Saudi Arabia when facing a decline in profitability. The dividend distribution policy primarily depends on annual business results and the assessment of the ability to maintain regulatory capital requirements. It is important for investors to understand that dividends in insurance companies may fluctuate from year to year depending on operational results, claims pressures, and regulatory changes.

Medgulf places significant importance on digital transformation as a key element in enhancing customer experience and improving operational efficiency. The company has launched integrated electronic platforms that allow customers to purchase insurance policies and manage claims electronically, providing a seamless and fast experience. The company has also invested in artificial intelligence and data analytics technologies to improve pricing processes, claims tracking, and reduce fraud rates.

In terms of customer services, Medgulf has focused on developing a unified call center and training specialized staff to handle complaints and inquiries, emphasizing response speed and solution quality. The company works to enhance loyalty through special offers and rewards programs, positively impacting customer retention rates and increasing market share. Continuous investment in technological solutions represents a fundamental pillar in Medgulf's strategy to keep pace with market demands and customer expectations in the digital age.

When comparing Medgulf with other insurance companies in the Saudi market, it is evident that it occupies a mid-range position in terms of size and market share, but it competes strongly in health insurance and engineering insurance. Tawuniya Insurance boasts a larger market share and broader financial capabilities, while Bupa Arabia excels specifically in health insurance. In terms of operational efficiency, Medgulf shows good capability in managing claims and premium growth, but it needs to continue improving profitability and controlling expenses, especially amid recent pressures on profits. Conversely, the company benefits from a diverse customer portfolio and an expansion strategy focused on innovation and international alliances. Ultimately, Medgulf's competitive strength depends on its ability to adapt to regulatory changes and effectively meet market needs.

Recently, Medgulf has witnessed several positive developments, most notably the opening of its new central headquarters in Riyadh in mid-2024 and the restructuring of its medical insurance claims management to enhance efficiency. The company has also launched new insurance products for individuals and small and medium enterprises and expanded its relationships with international reinsurance companies. Conversely, the company faced challenges related to declining profits in the first half of 2025, prompting management to review strategic plans and tighten control over operating costs. These developments reflect the company's vitality and resilience in dealing with market changes, highlighting its commitment to improving performance and providing innovative and integrated services to its clients.