AlJazira Takaful CEO expects GWPs of SAR 550 mln by year-end

Saqr Nader Shah, CEO of AlJazira Takaful Taawuni Co. 

AlJazira Takaful Taawuni Co. is expected to record gross written premiums (GWPs) between SAR 500 million and SAR 550 million this year, of which corporate contracts will make up SAR 200 million, CEO and Managing Director Saqr Nader Shah told Argaam in an exclusive interview on the sidelines of the sixth Saudi Insurance Symposium.  

The number of those insured by AlJazira Takaful reached 284,000 by the end of September, Shah said, expecting the total to reach 500,000 by year-end. The company targets over one million insured people in 2023.  

AlJazira Takaful introduced new insurance products in the general and medical insurance sectors, alongside its savings and protection products, following its merger with Solidarity Saudi Takaful Co. in the first quarter of 2021. The company’s insurance products saw a 640% surge compared to the previous period. 

This represents an opportunity to attract and target business and individual sectors to get their insurance products from one place, backed by the company’s strategic partnership with Bank AlJazira. 

AlJazira Takaful did not expand by offering new products in the early stage of its merger with Solidarity as it first focused on business restructuring, Shah explained, adding that new products contributed just 30-40% to the company’s profitability in 2021. 

On the other hand, he attributed a 20% decline in the company’s market share of protection products to mortgage finance, which is linked to protection programs. The large growth in real estate finance portfolios, backed by the government, was reflected on the growth of protection programs.

Shah noted that AlJazira Takaful’s market share in the savings sector ranges between 30% and 35% in Saudi Arabia, adding that the protection and savings sectors contribute between 20% and 25% to the company’s profitability.

“AlJazira Takaful has a special advantage, as it ranks 27th among insurance firms by GWPs, but takes the fifth place by profitability”, Shah added, deeming that risk management and pricing are two key factors of underwriting.  

“The company is keen to achieve the highest return for its shareholders, a strategic goal that we aim to maintain,” he added. 

In line with Vision 2030, Saudi Arabia aims to raise the insurance sector’s contribution to 4.3% of the Kingdom’s non-oil gross domestic product (GDP), which nears SAR 2.1 trillion. If non-oil GDP grows by 1.5%, it may reach SAR 2.8 trillion or SAR 3 trillion. This means the insurance sector will grow from SAR 42 billion this year to almost SAR 104 billion in 2030. 

The insurance sector will be a driver of the economic renaissance. The Kingdom’s aggressive vision and programs need protection, partly gained from insurance. 

Elsewhere, Shah commented on the higher prices of vehicle insurance costs, noting that insurance firms’ financial results in 2021 might have been the worst in the last few years, on the losses incurred from motor insurance.

He clarified that prices are linked to operating costs and losses from operating costs. Looking into the 2021 underwriting results, insurance services providers sustained losses of over 100%, which directly increased vehicle insurance costs.

Until the second half of 2022, underwriting results were not strong. Vehicle insurance prices are expected to rise further if companies fail to record positive underwriting results, or at least a reasonable level of losses.