United Cooperative Insurance: Comprehensive Financial Review

United Cooperative Insurance was established in the Kingdom of Saudi Arabia within the framework of the cooperative insurance system set by the state to regulate this sector. The establishment of the company was a response to the local market's need for insurance products compliant with Islamic law and Takaful principles, where the idea of cooperative insurance is based on risk-sharing among members rather than achieving traditional profits for shareholders. The company's headquarters is located in Riyadh, with branches spread across several major cities to cover most regions of the Kingdom. Since its listing on the Saudi financial market (Tadawul) under the symbol 8190, United has committed to transparent disclosures and advanced governance procedures, enhancing customer and investor confidence in its performance. The company began its operations with a capital of 10 million Saudi Riyals divided into one million shares with a nominal value of 10 Riyals per share, which is considered modest compared to some major companies in the sector. Over time, the company has worked to develop its operational structure and expand its product base to meet the changing demands of the Saudi market, especially amid population growth and legislative developments that imposed mandatory insurance in certain areas.

United Cooperative Insurance is subject to dual oversight from two main institutions: the Saudi Arabian Monetary Authority (SAMA), which oversees the technical and regulatory aspects of insurance activities, and the Capital Market Authority (CMA), which monitors the company's compliance with disclosure and governance rules. The company's board of directors consists of a selection of local talents, and the executive management is keen to comply with the regulations and instructions issued by the regulatory authorities. In recent years, there have been some administrative changes, including the appointment of a new CEO in mid-2024, as part of the company's efforts to enhance performance and overcome financial challenges. The company adheres to comprehensive policies for risk management and technical reserves, continuously updating its operational procedures in line with best practices in the insurance sector. It also provides detailed annual and quarterly reports reflecting its commitment to transparency before shareholders and regulatory bodies.

United Cooperative Insurance offers a diverse range of insurance products that meet the needs of both individuals and businesses. Its main products include: 1. Vehicle Insurance (Mandatory and Voluntary): Covers accidents, third-party liability, and damage compensation. 2. Cooperative Health Insurance: Targets individuals and companies, providing coverage for medical expenses, treatment, and hospital stays, with the company recently obtaining a new license for health insurance. 3. Property Insurance: Protects buildings, homes, and equipment from various risks such as fire or theft. 4. Engineering Insurance: Covers construction projects, contractor risks, and damages resulting from accidents during construction or operation. 5. Professional Liability and Civil Liability Insurance: Designed to protect professionals such as doctors and engineers from legal claims. 6. Miscellaneous Risks Insurance: Includes marine insurance, travel insurance, and specialized business insurance. The company focuses on developing new products in coordination with regulatory authorities, ensuring it meets the evolving needs of customers in a highly competitive environment.

The financial results of United Cooperative Insurance have fluctuated in recent years, influenced by market factors, competition, and reserve requirements. According to the company's reports for the year 2023 announced in March 2024, insurance revenues reached approximately 249.6 million Saudi Riyals, marking a decline of nearly -19% compared to 2022 when revenues were 308 million Riyals. As for net profits, the company recorded a net loss of approximately 20 million Riyals in 2023. The quarterly results for the third quarter of 2024 indicated continued pressure on profitability, with operating losses exceeding 5% of revenues. This is primarily due to rising claims and administrative and technical expenses, as well as pricing pressures in the market. The financial performance reflects the ongoing need to enhance reserves and improve the efficiency of the company's operations, which management has emphasized in its strategic plans for the next two years.

Investor evaluations rely on the company's key financial indicators, which provide a clear picture of its relative performance within the sector. Among these indicators are: - Share Price: Ranged between 13 and 15 Riyals in mid-2025, with a total market capitalization of approximately 140 million Riyals. - Price-to-Earnings Ratio (P/E): Relatively high, often exceeding 50× due to low profits or losses recorded in recent years. - Dividend Yield: Nearly zero (almost zero), due to the nature of cooperative insurance and the absence of regular distributions to shareholders. - Revenue Growth: The company recorded negative growth in 2023 of -19%, while there were periods of moderate growth in previous years. - Assets and Reserves: The company's assets reached approximately 400 million Riyals, and its technical reserves were about 230 million Riyals, reflecting its commitment to SAMA's requirements to ensure coverage for future claims. This analysis indicates that the company operates within a narrow profit margin and faces challenges in improving performance indicators compared to major companies in the market.

United Cooperative Insurance follows a clear policy aligned with the principles of cooperative insurance in the Kingdom, prioritizing the enhancement of technical reserves and administrative provisions over the distribution of cash dividends to shareholders. According to the announced data, the company did not distribute cash dividends during 2023 and 2024, directing any surplus towards supporting financial stability and ensuring the fulfillment of future claims for policyholders. This policy reflects the company's commitment to Sharia and regulatory standards, granting it flexibility in dealing with sudden fluctuations in claims volume or market changes. On the other hand, this approach may not be attractive to investors seeking regular income from stocks, as the investment return in this case is linked to improved financial performance and the future market value of the stock.

United Cooperative Insurance operates in a competitive market comprising over 30 insurance companies, including major entities such as Tawuniya, Bupa Arabia, Malath, Medgulf, and Asia Takaful. Some of these companies are characterized by larger capital bases and financial strength, providing them with greater flexibility in pricing and risk-bearing. United occupies a moderate position in the market; it is not among the giant companies, but it has a stable customer base and a strategic network of relationships with brokers, transport companies, and government institutions. Its entry into the health insurance sector through the new license in 2024 is a significant step to enhance its market share in a sector witnessing continuous growth and representing a major source of revenue for the sector as a whole. The company faces challenges in maintaining its share amid fierce competition, especially in mandatory vehicle insurance and health insurance, but its ability to develop specialized products and strategic partnerships may provide opportunities to strengthen its position in the future.

United Cooperative Insurance has witnessed several administrative and regulatory developments during 2024 and 2025. Among the most notable is the appointment of a new CEO in June 2024, as part of a strategy to refresh management and improve financial performance. The company also announced improvements in governance and transparency policies, with governance reports presented at general assemblies and discussions on board performance extensively with shareholders. On the other hand, the company responded promptly to recommendations from actuarial experts, particularly regarding enhancing technical reserves for certain products, leading to the lifting of a temporary ban on issuing mandatory insurance documents previously imposed by SAMA. These developments reflect the company's commitment to adapting to regulatory changes and its eagerness to apply best practices in management and governance to achieve long-term financial stability.

In June 2025, United Cooperative Insurance announced the signing of a memorandum of understanding with the Saudi Cooperative Insurance Company (Tawuniya), the largest insurance company in the Kingdom. This memorandum aims to study the feasibility of a potential merger between the two companies, with the goal of forming a more robust and effective insurance entity. This development holds significant importance for the company and its shareholders, as it may allow it to benefit from larger capital, broader actuarial expertise, and a massive customer base. The merger could also lead to improved operational efficiency and achieve economies of scale, in addition to enhancing competitiveness in a market increasingly moving towards mergers and strategic partnerships. The implementation of the merger remains contingent upon regulatory approvals and the endorsement of the general assemblies of both companies, necessitating close monitoring by investors and those interested in sector developments.

The Saudi insurance sector, including United Cooperative Insurance, faces numerous challenges that impact profitability and sustainability. Among the most prominent challenges are: 1. High claims rates, especially in health and vehicle insurance, leading to profit erosion. 2. Intense competition and low profit margins due to price wars among companies. 3. SAMA's stringent requirements regarding technical reserves and financial solvency, imposing pressures on small and medium-sized companies. 4. New legislation and changes in government policies that may affect the demand for certain products, such as health insurance with the expansion of free government services. 5. Technological transformations (InsurTech) requiring additional investments to develop digital infrastructure and enhance customer experience. These challenges require the company to focus on improving operational efficiency, developing specialized products, and adopting partnership and merger strategies to enhance competitiveness and remain in the market.

Despite existing challenges, several future opportunities stand out for United Cooperative Insurance to enhance its growth and expand its market share. Among the most important opportunities are: - Expansion in health insurance: With the new license, the company can target a larger segment of businesses and individuals in a rapidly growing market, providing recurring revenues. - Development of digital products: The company can benefit from digital transformation in issuing policies, settling claims, and providing customer services, enhancing operational efficiency and reducing costs. - Mergers and alliances: The memorandum of understanding with Tawuniya represents an opportunity to create a larger entity more capable of facing competition, alongside enhancing technical and managerial expertise. - Partnerships with government entities and major projects: These partnerships allow for winning large insurance contracts in infrastructure projects and new industries under the Kingdom's Vision 2030. - Focus on specialized and professional insurance: Such as engineering insurance and civil liability insurance, which are witnessing increasing demand from the private sector. The company's ability to capitalize on these opportunities depends on its flexibility in adapting to market requirements and its proactive strategies in product development and risk management.

Risk management and claims management are central to the strategy of United Cooperative Insurance, given their direct impact on profitability and financial sustainability. The company relies on accurate risk assessment when pricing products, considering historical data and actuarial expert estimates to ensure the adequacy of technical reserves. In recent years, the company has faced challenges in controlling the claims-to-premiums ratio, which exceeded 70%, meaning that about 70 Riyals of every 100 Riyals in premiums are spent on claims. The company is working to improve this ratio by developing underwriting procedures, enhancing collection processes, and applying modern techniques in fraud detection. It also focuses on settling claims quickly and transparently, positively reflecting on customer satisfaction and trust, while continuing to invest in training technical staff and improving digital systems to support claims operations.

United Cooperative Insurance adheres to all regulatory requirements issued by the Saudi Arabian Monetary Authority (SAMA) and the Capital Market Authority. This includes compliance with financial disclosure standards, providing detailed periodic reports, and implementing governance and risk management policies. The company has faced some regulatory warnings in previous periods, particularly regarding the adequacy of technical reserves, which led to a temporary ban on issuing certain insurance documents. However, the company responded quickly to these warnings and enhanced its reserves, allowing for the lifting of the ban and the restoration of full licenses. The company's policies are also subject to periodic reviews by independent actuarial committees, and it is keen on transparency with shareholders through annual general assemblies and governance reports. Regulatory compliance is fundamental to the company's sustainability and protection against potential systemic risks.

The insurance sector in the Kingdom of Saudi Arabia represents a vital part of the national economy, driven by population growth, urban development, and legislative changes that have imposed mandatory insurance in various fields. The total insurance premiums written in the local market range between 20 and 22 billion Riyals annually, with a growth rate ranging from 3% to 6%. The sector is witnessing a shift towards health products and cooperative insurance, with an increasing trend towards digitization and improving customer experience. Regulatory authorities support mergers and acquisitions to enhance efficiency and raise the level of competition. In this context, United Cooperative Insurance emerges as a medium-sized company seeking to benefit from growth in health insurance and digital transformations while continuing to face challenges from major companies and the need to enhance financial solvency and profitability in the medium term.