Saudi’s Al Rajhi Takaful continues fall in quarterly profit on lower net contributions

Saudi Arabia’s Al Rajhi Company for Cooperative Insurance posted a 21.74% fall in net profit before zakat for the third-quarter versus the same period in 2018.

This is a steeper drop than in the second-quarter, which saw the Islamic insurer’s net profit fall by 3.42% compared to the same three months in 2018.

The insurer, one of the kingdom’s biggest, reported on Monday (November 4) net profit before zakat of 60.58 million riyals ($16.15 million) for the three months ending September 30 from 77.41 million riyals for the same third-quarter last year.

“The decrease in profit before zakat is primarily due to decrease in net contributions earned by 88,102 thousand [riyals] (12.11%) partly offset by increase in both policyholder and shareholder investment income by 0.57% and 50.64% respectively,” the company said in a filing on Tadawul.

Policyholder investments reached 16.27 million riyals and shareholder investment income rose to 5.99 million riyals.

Gross written premiums dropped by 17.06% to 583.385 million riyals from 703.39 million riyals for the same three months last year.

NINE-MONTH PERFORMANCE

Al Rajhi Takaful’s performance for the first nine months of 2019 was similar, as net profit before zakat dropped by 32.4% to 116.04 million riyals versus 171.66 million riyals for the corresponding period last year.

The insurer said this is primarily due to a decrease of 150.24 million riyals in net contributions earned. It said this was partly offset by a 70.63% decrease in allowance for doubtful debts and increase in both policyholder and shareholder investment income by 17.48% and 43.93%, respectively.

Saudi Arabia’s insurance landscape is slowly changing after the Saudi Arabian Monetary Authority (SAMA) proposed stricter risk-based capital requirements for firms.

In September, Walaa and MetLife AIG agreed to merge, with the bigger insurer Walaa saying it will increase its capital from 528 million riyals to 646.4 milion riyals.

There are currently 33 insurance and reinsurance companies licensed to operate in Saudi Arabia, according to data from SAMA.

Gross written premiums in 2018 reached 34,920 million riyals ($9.3 billion), down from 36,597 million riyals in 2017, according to SAMA data.

($1 = 3.75 Saudi riyals)

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