Al Sagr Insurance says accumulated losses account for 65% of capital

Logo of Al Sagr Cooperative Insurance Co.

Al Sagr Cooperative Insurance Co.’s accumulated losses reached SAR 259.3 million, or 65% of the paid-up capital, amounting to SAR 400 million, as of June 30, 2022, according to a bourse filing.

The company’s losses, incurred from 2018 to 2021, were driven by higher net incurred claims and direct expenses related to the medical business.

These losses were also triggered by higher net incurred claims and direct expenses related to motor business in 2021 and a 25% increase in general and administrative expenses (G&As) from 2018 to 2021.

Meanwhile, H1 2022 losses were attributed to higher net incurred claims and a 36% increase year-on-year (YoY) in direct expenses related to motor business, as well as 13% higher G&As YoY.

Al Sagr said several measures will be taken to offset losses, including monitoring the pricing adequacy continuously to ensure that prices are higher than the actuarial recommended prices for medical and motor lines of business.

The company will continue to largely offset losses of the motor retail business, map out an advanced business plan that focuses on higher-yielding insurance segments, including general, corporate and motor insurance, and launch cost-cutting initiatives to reduce G&As and acquisition costs.

Additionally, Al Sagr will introduce new products, capitalize on information technology (IT) solutions, and increase digitalized sales.

Measures related to the Saudi-listed companies whose accumulated losses reached more than 20% of capital will be applied.

The board of directors recommended to start implementing the required procedures, while complying with the relevant laws and regulations as regards companies whose losses exceeded 50% of the capital.