Q3 usually poses major challenge for insurers: UCA Deputy CEO

Shaher Almadani, Deputy CEO at United Cooperative Assurance Co. (UCA)

The third quarter of every year poses a major challenge for many insurance companies' in terms of their financial results, said Shaher Almadani, Deputy CEO at United Cooperative Assurance Co. (UCA), adding that the company's Q3 results were the lowest compared to the previous periods.

The insurer’s Q3 revenue primarily depended on the motor insurance business, as UCA generally aims to grow all segments in a balanced manner, avoiding any concentrations, Almadani explained in an interview with Argaam.

UCA remains committed to its strategies aimed at improving its financial position in the long term and developing its infrastructure to support business growth and align with its goal of continuing as a leading and active participant in the sector. The company also seeks to diversify its portfolio in line with its risk management strategies.

The below are the details of the interview:

UCA sustained SAR 270,000 losses in Q3 2024, versus earnings of SAR 2.07 million in a year-earlier period. Can you give an overview of these results?

The third quarter of every year poses major challenges for most insurance companies’ financial results, and Q3 2024 results were the lowest compared to previous years and other periods. This particularly occurred as gross written premiums (GWPs) for the same period last year included around SAR 80 million from non-renewable policies, such as the Custodian of the Two Holy Mosques’ Grand Mosque Expansion Project policy. Additionally, competition intensified in the Saudi insurance market, and the company received an insurance claim from one of its clients, which was previously announced.

What were the main factors that led to a 13% drop year-on-year (YoY) in insurance revenue?

In Q3 2024, the company generated insurance revenue of SAR 281 million, with total revenue of SAR 747.6 million for the nine months ended Sept. 30, 2024. Excluding revenue from non-renewable policies, the company’s revenue from all business activities showed growth exceeding 5%. The significant factor during this period was the large non-renewable engineering insurance contracts, which affected GWPs, compared to growth in other segments.

Which sectors contributed the most to Q3 revenues?

The company generally aims to boost all its segments in a balanced way, without concentrating on a certain area. Since its inception, UCA has been among the key players in the local automotive insurance market. For this reason, the third quarter, as in most previous periods, relies primarily on the automotive insurance segment as a cornerstone of the company's revenue. The company aims to leverage its leadership position in this business to maximize profitability, finance growth projects, and develop infrastructure for other segments.

What are the reasons for the 99% decline in net insurance services results compared to the previous quarter?

The insurance market in the Kingdom, like many other sectors, is significantly impacted by competition, which plays a key role in shaping its results.

Notably, 17 out of 25 companies in the sector reported a decline in their insurance services results, accounting for 68% of the sector’s companies. This figure would be even higher if companies specializing in the medical sector were excluded to ensure a fair comparison.

What are your expectations for the company's performance in the fourth quarter?

The company remains fully committed to its strategies, which focus on strengthening its financial position, improving infrastructure, and continuously diversifying its product offerings while enhancing customer services. These efforts are intended to support business growth and position the company as a leading player in the Saudi insurance sector.

Additionally, the company is actively working on diversifying its insurance and investment portfolios in alignment with its risk management strategies. We maintain a positive outlook and expect steady progress in both the short and long term.

Furthermore, we are confident that the ongoing efforts of the Insurance Authority (IA) to develop the insurance sector— specifically the motor insurance segment— will yield positive results, in line with the goals of Saudi Vision 2030.