Tawuniya Insurance Company: Comprehensive Financial Performance Analysis

Tawuniya Insurance Company was established in 1986 as the first cooperative insurance company in the Kingdom of Saudi Arabia. Since its inception, the company has played a pioneering role in developing the local insurance sector, contributing to spreading the culture of insurance among individuals and businesses. It started its operations by offering health insurance products, vehicle insurance, and property insurance, before later expanding its scope to include engineering insurance, fire insurance, life insurance, and other related financial products.

Tawuniya has distinguished itself since its early days by adhering to the highest standards of corporate governance and financial transparency, earning the trust of a large segment of customers in the Kingdom. It was also one of the first companies to list its shares on the Saudi financial market (Tadawul), allowing investors to participate in the growth of the thriving insurance sector in the country.

Over the decades, Tawuniya has managed to build a massive customer base covering both the public and private sectors, expanding to become one of the largest players in the Saudi insurance market, with a significant market share in health insurance and vehicle insurance, supported by a wide geographical spread and multiple branches across the Kingdom.

Tawuniya Insurance Company is subject to the supervision and oversight of the Saudi Capital Market Authority (CMA), and it adheres to all applicable regulations and rules in the local insurance market. Tawuniya relies on a solid administrative and organizational structure that includes a board of directors composed of experts in insurance and finance, as well as specialized committees for auditing, risk management, and rewards.

Since its establishment, the company has been keen to apply the highest governance standards, including compliance with International Financial Reporting Standards (IFRS), regular disclosure of its financial results, and monitoring the implementation of anti-money laundering and counter-terrorism financing systems. Tawuniya has received several awards for transparency and governance, reflecting its position as a role model in the Saudi financial market.

Additionally, the company pays special attention to risk management and regularly updates its policies to align with local and global developments in the insurance sector, thereby enhancing the confidence of both investors and customers.

Tawuniya Insurance Company witnessed strong financial performance during 2024 and early 2025, driven by notable growth in insurance premiums and investment revenues. According to official data:

- The share price in the first half of 2025 was approximately 150 Saudi Riyals, with limited fluctuations compared to other companies in the sector.
- The company's market capitalization reached about 32 billion Saudi Riyals, reflecting its status as one of the largest insurance companies in the Kingdom.
- The price-to-earnings (P/E) ratio was around 12-13 times, which is below the sector average, indicating the stock's attractiveness from a financial valuation perspective.
- The cash dividend yield exceeded 4%, with a cash dividend distribution of 6% of the nominal value of the share.
- The company achieved a revenue growth of 12% compared to the previous year, with revenues for the third quarter of 2024 amounting to 1.2 billion Saudi Riyals, and an operating profit growth of 18%.

These indicators demonstrate Tawuniya's ability to achieve sustainable growth in a changing competitive environment while maintaining good profitability levels and rewarding distributions for shareholders.

The Saudi insurance sector has undergone significant transformations in recent years, supported by government measures aimed at enhancing insurance coverage and improving service quality. Among the most notable transformations are the mandatory insurance on vehicles and health, and the implementation of international IFRS 17 standards, which have contributed to increased demand for insurance products and raised the level of transparency in the sector.

Despite sustainable growth, the insurance penetration rate remains relatively low, at just over 3.5% of GDP according to the latest estimates. The government aims to raise this rate as part of the Vision 2030 initiatives through awareness programs, legislative incentives, and enhancing partnerships between the public and private sectors.

The entry of new players into the market and the merger of existing companies have created opportunities and challenges for major companies like Tawuniya, which relies on its long experience and capital base to continue expanding and offering innovative products that meet the changing market needs.

Tawuniya Insurance Company places utmost importance on digital transformation and technological innovation, being one of the first companies to introduce modern technologies into its operations. The company launched integrated online platforms that allow for the purchase of insurance policies and the management of claims instantly via the internet and mobile applications. It has also implemented pilot programs to use artificial intelligence in loss assessment and claims processing, contributing to reducing compensation payout times and improving customer experience.

In 2024, Tawuniya introduced telemedicine services in collaboration with the Saudi Ministry of Health to provide digital medical consultations within health insurance. These initiatives have helped enhance the company's position in the market, raise customer satisfaction levels, and reduce operational costs.

These strategies reflect the company's commitment to keeping pace with global developments in the insurance industry and leveraging digital transformation opportunities to achieve greater efficiency and provide more comprehensive and flexible services.

Despite strong performance and ongoing expansion, Tawuniya Insurance Company faces several challenges in the future business environment. Among the most prominent challenges are:

- Intense competition with the entry of new and foreign insurance companies, putting pressure on prices and affecting profit margins.
- Rising costs of medical claims and compensations, especially with the expansion of mandatory health insurance.
- The ongoing need to develop technical systems and cybersecurity to combat fraud and cyberattacks.
- The potential impact of global economic fluctuations, such as interest rates and inflation rates, on investment returns and the company's financial performance.
- New capital requirements and the implementation of IFRS 17 standards, which pose challenges for managing technical reserves and assessing insurance contracts.

Tawuniya is working to address these challenges by developing hedging policies, improving risk management, and enhancing innovation in products and services while maintaining its leading position in the Saudi market.

Tawuniya Insurance Company faces strong competition from several local and international companies in the Saudi insurance sector. Among the most prominent competitors are:

- Bupa Arabia for Health Insurance: A leader in health insurance for individuals and companies.
- National Insurance: Offers integrated services including engineering and industrial insurance.
- Allianz Saudi Arabia Insurance: A branch of a global company focusing on health and vehicle insurance.
- Malath Insurance: Specializes in regulatory vehicle insurance and legal protection.
- Al Rajhi Insurance: Active in health insurance and has a wide customer base following its merger with other companies.

Tawuniya distinguishes itself from its competitors by its asset size, product diversity, and brand strength, giving it greater capacity to absorb market changes and meet the needs of a wide range of customers.

The year 2024 and the beginning of 2025 witnessed several strategic developments at Tawuniya Insurance, which had a tangible impact on the company's performance and reputation in the market:

- Launching partnerships with the Ministry of Health and medical entities to develop telemedicine services.
- Enhancing digital platforms and providing electronic health insurance cards.
- Starting to use artificial intelligence to process claims and expedite compensation procedures.
- Launching awareness campaigns to promote insurance culture and social responsibility.
- Increasing investments in infrastructure and alternative energy funds as part of a diversification policy.

These initiatives reflect Tawuniya's commitment to achieving the goals of Vision 2030 and enhancing the quality of services provided to customers while maintaining the sustainability of the company's growth and strengthening its competitive capacity.

The IFRS 17 international standard for insurance contracts came into effect in Saudi Arabia in 2023, imposing significant changes on how insurance revenues and expenses are calculated. For Tawuniya, the application of the standard led to a restructuring of its financial reports, particularly regarding the estimation of technical reserves and the distribution of profits over longer periods.

In the quarterly reports for 2024, the effects of IFRS 17 were evident on the company's results, with limited fluctuations in quarterly profits compared to previous years. However, Tawuniya was able to quickly adapt to the new requirements thanks to specialized work teams and external consulting support, enhancing the transparency of its financial reports and investor confidence.

The implementation of the standard is expected to raise the level of transparency in the long term, making the company's reports more accurate and reliable for regulatory authorities and financial analysts.

Tawuniya Insurance Company is committed to sustainability and environmental and social responsibility (ESG) principles, considering them an essential part of its corporate strategy. In 2024, the company launched awareness campaigns on the importance of insurance in protecting individuals and institutions from financial risks, and it worked to enhance its environmental practices by reducing paper consumption and adopting digital solutions across all branches and operations.

Additionally, Tawuniya participates in initiatives to support the local community, such as health awareness programs and contributing to sustainable infrastructure projects. The company also focuses on enhancing transparency and sound governance, committing to applying the highest standards of financial and social disclosure, which supports its reputation as a reliable partner in the economic and social development of the Kingdom.

Forecasts indicate that the insurance sector in Saudi Arabia will continue to grow at annual rates ranging from 8% to 10% over the next five years, driven by the expansion of mandatory insurance and increased insurance awareness among individuals and businesses. Tawuniya is expected to play a pivotal role in achieving the goals of Vision 2030 related to the development of the health and insurance sector by offering innovative products and enhancing partnerships with government and private entities.

Moreover, Tawuniya's ability to keep pace with regulatory and technological changes, adopt governance and sustainability standards, qualifies it to benefit from future growth opportunities while continuing to face challenges related to competition and global economic transformations. The sector remains susceptible to macroeconomic fluctuations, necessitating close monitoring of developments and continuous adaptation to changes.

Tawuniya Insurance Company features a diverse ownership structure that includes government institutions, local banks, and Saudi investment funds, in addition to a publicly traded percentage on the Saudi stock market (Tadawul).

The bylaws of the Saudi financial market prohibit foreign ownership of the majority in insurance companies, ensuring the stability of the shareholder structure and providing a sustainable base of local investors. This structure contributes significantly to enhancing the company's stability and protecting it from external market fluctuations.

Additionally, the policies followed in profit distribution and capital management are subject to the approval of the general assembly, enhancing transparency and ensuring the interests of all shareholder categories in the long term.