MEDGULF’s auto insurance claims down 11% in 2020 due to lockdown: CFO

Ahmed Tarboush, MEDGULF's chief financial officer

The Mediterranean and Gulf Insurance and Reinsurance Co.’s (MEDGULF) auto insurance claims decreased by 11% in 2020 affected by the lockdown implemented to prevent the spread of coronavirus, CNBC Arabia reported, citing Ahmed Tarboush, chief financial officer.

This takes into account the increase in provisions related to the decision of the Saudi Central Bank (SAMA) to renew comprehensive auto insurance for two months.

MEDGULF’s market share of health and auto insurance is 8% and 5%, respectively, while the overall share is 6.6%, the CFO added.

With regard to the capital restructuring through reduction followed by a hike via rights issue, he stressed that the company's capital is not in a serious situation as accumulated capital losses amount to 12.4%.

Tarboush pointed out that the capital restructuring has a strategic goal, where the company aims to achieve profits to be distributed to shareholders in the future. He also noted that the insurer has plans to expand, with the focus during the current year on the expansion of general insurance.

Elsewhere, he said that the merger or acquisition process is being studied internally, and the company hopes the target acquisition or merger to be value accretive.

In October 2020, MEDGULF’s board of directors recommended a capital cut by 12.5% from SAR 800 million to SAR 700 million to offset the accumulated losses, according to data compiled by Argaam.

The board of directors also proposed a capital increase by SAR 350 million via a rights issue following the capital reduction.