Salama CEO says strategic plans boosted growth in Q1 2021 GWPs, merger under study

Salama CEO Omar Al Ajlani

Salama Cooperative Insurance Co.'s Q1 2021 financial results were promising, as the company posted a positive net income for the fourth consecutive quarter, CEO Omar Al Ajlani told Argaam in a telephone interview.

These results were driven by the company's strategic plans that contributed to the growth of gross written premiums (GWPs) and shareholders' investment income.

These plans also contributed to reducing net incurred claims as well as general and administrative expenses by 11% year-on-year (YoY).

The motor insurance products contribute 75% to the company’s total sales, Al Ajlani said, expecting higher market share, especially amid higher demand for financially-leased motor insurance products.

Moreover, medical insurance products account for up to 17% of GWPs, which are relatively satisfactory and generate the necessary profit in light of Salama’s objectives.

“Despite the challenges facing most insurance players aiming to expand in this product, there is a great difference in the market shares of insurers, as only three players dominate almost 80% of the sector’s GWPs. Moreover, the new measures set by the regulator, expansion in coverage and the increase in the health sector’s costs raised the risks of this product,” Al Ajlani added.

Salama’s accumulated losses stood at SAR 79 million, or 32% of capital, by the end of Q1 2021, due to various reasons, mainly the increase in the medical insurance segment’s accumulated losses by 110%.

Moreover, general and administrative expenses also increased. However, strategic plans were developed by the company to mitigate the impacts of these results in the short and medium-term, which in turn contributed significantly to reducing Salama’s accumulated losses in the first quarter.

Salama turned to a net profit of SAR 1.2 million in Q1 2021, compared to a loss of SAR 26.9 million in the same period last year, Argaam earlier reported.