Arqaam Cap reaffirms Saudi Re’s ‘Buy’ rating, sets TP at SAR 11

Arqaam Capital maintained a “Buy” recommendation on Saudi Re for Cooperative Reinsurance Co. (Saudi Re) and revised the target price higher to SAR 11 from SAR 10.3 per share.

The DIFC-based investment bank placed Saudi Re share among the preferred stocks in the Kingdom’s insurance sector.

The reinsurer is on track to further improve its underwriting margins in line with its previous expectations, it said in a recent report.

In addition, Arqaam Capital expects the company’s underwriting margin to reach 4.2% by 2023, supported by further optimization and geographical diversification in its business portfolio.

The reinsurer’s improved credit rating and the retreat of some of its competitors have provided new market share opportunities, the report said.

Despite written premium slowdown by -4% CAGR in the last two years, Saudi Re outperformed peers of globally listed reinsurers with similar market cap and portfolio size, showing improved combined ratios by 5% compared to an 8% worsening for peers, the investment bank noted.