Itqan Cap recommends “overweight” on Tawuniya; target price at SAR 81

Itqan Capital revised its recommendation for The Company for Cooperative Insurance (Tawuniya) to “overweight”, setting the target price at SAR 81 per share.

Tawuniya’s portfolio focus on medical and property and casualty (P&C) insurance, coupled with a corporate client base, will provide resilience to the company’s performance in 2020, the brokerage firm said in a new report.

In addition, the medical insurance segment, which represents 71% of the total gross written premium (GWP), is expected to remain intact despite the current economic challenges. Claims for medical and auto insurance are likely to decline amid curfew measures given lower accidents and hospital visits.

However, Tawuniya’s motor segment faces risks as already weak auto sales are expected to decline this year.

According to Itqan Capital, Saudi Arabian Monetary Authority’s (SAMA) plan to raise the minimum capital requirements for insurance companies, currently set at SAR 100 million, is anticipated to drive industry consolidation and strengthen the capital base of small players, helping improve underwriting margins and pricing in the sector.