Salama Cooperative Insurance: Financial Performance and Sector Analysis

Salama Cooperative Insurance was established as one of the first cooperative insurance companies in the Kingdom of Saudi Arabia and is listed on the Saudi financial market (Tadawul) under the symbol 8050. The company operates in the Takaful insurance sector, which focuses on the concept of cooperation and solidarity among members, complying with Islamic Sharia. Salama offers a wide range of insurance products, including health insurance for individuals and institutions, vehicle insurance, fire and risk insurance, engineering insurance, marine and aviation insurance, in addition to group life insurance and general insurance.

The company enjoys a good reputation among sector companies and is known for its commitment to financial disclosure standards and sound governance. Salama is also committed to applying the regulations of the Insurance Authority and the Saudi Arabian Monetary Authority, and all its operations are subject to strict supervision, enhancing the confidence of clients and shareholders. The company plays a key role in developing the local insurance market, particularly by offering innovative products and expanding its digital and technological service network.

Regulatory-wise, Salama reflects an advanced governance model in the Saudi financial market, having established specialized committees such as the Audit Committee, the Nominations and Risks Committee, ensuring effective risk management and compliance with international and local standards.

Salama Cooperative Insurance's stock is considered one of the active stocks in the main market (TASI) within the insurance sector. The stock price is subject to supply and demand factors, as well as the company's financial performance and sector developments. At the end of 2024 and the beginning of 2025, the price of Salama's stock was approximately 10.88 SAR, according to Argaam and Tadawul.

The stock has witnessed notable fluctuations in recent years due to declining net profits and rising insurance claims, in addition to news related to mergers and capital increases. Quarterly business results and sector developments as a whole have also affected the stock's movement.

It is worth noting that investors closely monitor the company's disclosures on Tadawul, where it announces its financial results, management developments, and any strategic decisions such as rights issues or changes in capital structure. The company places great importance on transparency and providing information, facilitating investors' decision-making based on accurate and updated data.

Salama Cooperative Insurance announced its financial results for the year ending December 31, 2024, reporting a net profit of 30.1 million SAR. This figure is low compared to the profits of 2023, as net profit declined by approximately 41%, reflecting significant pressures on operational performance.

For the fourth quarter of 2024, net profit was approximately 2.8 million SAR only, a sharp decline of 67% compared to the same quarter of the previous year. This decline is attributed to rising insurance claims, particularly in health insurance, increased operational costs, and intense price competition in the Saudi insurance market.

These results reflect market challenges, as profit margins have declined, and operating revenues have decreased, amid the company's efforts to enhance its financial and operational efficiency. The company has also not distributed cash dividends in recent years, indicating its focus on strengthening its financial position and improving solvency, rather than distributing profits to shareholders at this time.

Recent financial indicators for Salama indicate a financial position that requires further improvement. In terms of the price-to-earnings (P/E) ratio, the indicator has risen to unconventional levels, exceeding 100 times, due to declining profits relative to the large market value. This high P/E reflects the challenges the company faces in achieving sufficient operating profits relative to its market capitalization.

The market capitalization has reached several billion SAR, with fluctuations in the stock price throughout 2024. Despite the high coverage of the rights issue (at 612%), the cash distribution yield remains very low or zero, as the company has not announced dividends in recent years.

Revenue growth has been weak or negative during 2024, with net profits continuing to decline by about 41% from the previous year. These indicators highlight the need to monitor the company's future financial developments, especially in light of merger plans and improving operational performance.

The Saudi insurance sector is one of the vital sectors within the national economy, comprising over 30 insurance companies providing various services to individuals and businesses. The sector is regulated by the Insurance Authority and the Saudi Arabian Monetary Authority, with full compliance with cooperative insurance regulations.

Recently, the sector has faced significant challenges, the most important of which are the increase in insurance claims, especially in health insurance, rising operational costs, and intense price competition. According to data from the first half of 2025, the aggregate profits of insurance companies declined by 38% compared to the same period last year, negatively impacting the performance of companies, including Salama.

Despite these challenges, the sector is working on developing new products, such as cooperative health insurance for non-Saudis, and expanding digital services. The market is also witnessing strategic mergers aimed at enhancing financial strength and improving operational efficiency, such as the merger of Salama with Enaya. Regulatory oversight remains an important factor in maintaining sector stability and ensuring the protection of clients' rights.

Salama Cooperative Insurance offers a comprehensive range of insurance products that meet the needs of both individuals and businesses. These products include health insurance, which is one of the company's largest lines of business, providing comprehensive medical coverage with a high level of service. The company also offers vehicle insurance, covering accidents and damages to third parties, with various packages to suit different customer segments.

Additionally, Salama provides property insurance, engineering insurance, marine and aviation insurance, and fire and natural disaster insurance. The company is keen on developing new products and innovating solutions that align with digital transformations and the changing needs of the market.

Salama is also distinguished by its high-quality customer service, a wide network of service centers and branches, as well as reliance on modern technologies in managing operations and claims files. This integration of services enhances the company's position in the market and enables it to compete amid sector changes.

Salama Cooperative Insurance faces strong competition from several major companies in the Saudi market, such as the National Cooperative Insurance Company (Tawun), Malath, Walaa, Wafa, Bupa Arabia, and Rayan Insurance. Each of these companies has diverse product packages and targets different customer segments.

Salama's strengths lie in its focus on health insurance and cooperative insurance, in addition to its continuous efforts to expand its customer base through digital services and innovative coverages. Although its market share is lower than some major players, the merger plan with Enaya (formerly Inma Tokyo Marine) could enhance its position and elevate its ranking among leading companies in the sector.

The company seeks to face competition by improving operational efficiency, enhancing governance, and continuously developing products. It also closely monitors sector developments to ensure a swift response to regulatory changes and customer requirements.

Salama Cooperative Insurance has witnessed several important regulatory and administrative developments during 2024 and 2025. In January 2025, the company announced a capital increase through a rights issue aimed at enhancing financial solvency and supporting growth plans. This move received significant interest from shareholders, with the offering covered at 612%, reflecting investors' confidence in the company's future.

In February and August 2025, the company signed a memorandum of understanding and then a binding merger agreement with Enaya, representing a qualitative shift in the company's trajectory and enhancing its competitiveness in the market. Salama also obtained regulatory approvals to form new strategic and supervisory committees within its board of directors, such as the Risk Management Committee and the Nominations Committee, enhancing governance and transparency.

These developments reflect the company's commitment to complying with regulatory standards, enhancing administrative efficiency, and sustaining growth amid market challenges.

The merger between Salama Cooperative Insurance and Enaya is one of the most significant events in the Saudi insurance sector for 2025. This merger aims to unify resources and enhance competitive strength, as both companies will benefit from the integration of insurance portfolios and expanding the customer base.

The merger is expected to achieve cost savings in operational expenses, improve financial efficiency, and increase operational stability in the face of sector challenges. It will also provide the unified entity with greater capacity to develop new products and respond to changing market demands. However, this merger requires significant efforts in governance and administrative integration, in addition to obtaining approvals from regulatory authorities and shareholders.

Market observers believe that the merger of Salama with Enaya could change the competitive landscape, especially if the expected integration in operations and services is achieved, which may prompt other companies in the sector to reassess their strategies.

As part of its efforts to enhance financial solvency, Salama launched a rights issue in January 2025 to increase capital. This step aims to support the company's expansion and meet increasing regulatory capital requirements, especially amid rising operational risks and weak profitability in the sector overall.

The offering witnessed notable interest from shareholders, with the remaining offering covered at 612%, confirming investors' confidence in the company's future and strategic plans. This step represents part of the company's policy to rely on sustainable funding sources and improve its financial position, ensuring its continued ability to meet its obligations and enhance its competitiveness in the market.

Increasing capital is a common practice among Saudi insurance companies, especially with regulatory changes and rising capital requirements imposed by the Saudi Arabian Monetary Authority and the Insurance Authority.

Salama places great importance on applying the highest standards of governance and transparency, having established specialized committees within its board of directors during 2024 and 2025, such as the Nominations Committee, the Risk Committee, and the Audit Committee. These committees aim to ensure well-considered strategic decision-making, improve risk management, and enhance financial disclosure.

The company is also committed to full compliance with the instructions of the Saudi Arabian Monetary Authority and the Capital Market Authority, and it adheres to preparing and publishing periodic financial reports, disclosing material developments, and board decisions.

These regulatory measures enhance the level of trust among shareholders and stakeholders, contributing to the company's long-term sustainability, especially in an ever-changing competitive and regulatory environment.

Salama Cooperative Insurance aims to achieve sustainable growth through adopting multiple strategies, including expanding digital products, developing innovative insurance services, and leveraging mergers to enhance market share. The company also focuses on improving operational efficiency and reducing costs, alongside investing in human capital and modern technologies.

Salama is working on restructuring its insurance portfolio to reduce risks and improve service quality, while closely monitoring market trends and regulatory changes. The company bets on enhancing strategic partnerships and expanding into new sectors, such as cooperative health insurance for non-Saudis, and responding swiftly to opportunities presented by digital transformations.

These strategies aim to enhance financial solvency and achieve better returns for shareholders in the medium and long term, while continuously adhering to governance standards and protecting stakeholders' interests.

Salama Cooperative Insurance, like other Saudi insurance companies, faces a range of risks and challenges that affect its financial and operational performance. Among the most prominent challenges are the rising volume of insurance claims, especially in health insurance; intense price competition among companies; ongoing regulatory changes; and high capital requirements.

Additionally, the overall decline in sector profitability represents an additional pressure on Salama, especially with declining profits in 2024 and continued losses in 2025. Technical risks (such as claims fluctuations and natural disasters) remain one of the key factors that could impact the company's results.

Therefore, Salama focuses on enhancing risk management, improving underwriting processes, and adopting strong governance policies to mitigate the impact of these challenges on its future performance.

You can follow the news and developments of Salama Cooperative Insurance through several official and reliable sources, primarily the Saudi financial market website (Tadawul), which provides a dedicated page for the company that includes financial disclosures, annual reports, and board news.

The company's official website also publishes all financial announcements, period budgets, and news of regulatory operations. Financial news sites such as "Argaam" and "Al-Jazeera Financial" continuously cover the company's developments, especially regarding business results, mergers, and strategic decisions.

It is advisable to follow the reports of the Capital Market Authority and the Insurance Authority, as they issue periodic updates on regulatory changes and the performance of listed companies, which helps investors and followers stay informed of all new developments.