Tawuniya's medical segment 'most profitable' in Q1: CFO

The Company for Cooperative Insurance’s (Tawuniya) medical segment is the “most profitable”, as it achieved SAR 127 million in profit from insurance services, or 78% of the company's profit from insurance operations in Q1 2023, said Chief Financial Officer (CFO) Ammr Kurdi.

In a phone interview with Argaam, Kurdi said that the company saw growth in terms of gross written premiums (GWPs), which wasreflected positively on all segments. The medical segment’s GWPs grew by 36%, the motor business (117%), and property and casualty (59%).

He added that comparing the GWPs of the motor and medical segments in Q1 2023 quarter-on-quarter is not considered highly feasible due to the seasonality of underwriting in the insurance segment.

Tawuniya achieved a outstanding level of profitability that reflects its continued adoption of strong and highly efficient pricing policies that make the required balance between competition and profitability. In addition, the claims management process is distinguished by using the latest technologies, said the CFO.

Kurdi added that the company worked on all the required adjustments to the balances with regard to retained earnings, registering a decrease of about SAR 163 million as a result of moving to IFRS No. 17.

He explained that IFRS No. 9 is related to the application of new mechanisms for standards in calculating insurance reserve rates and bad debt reserve rates and calculating the investment portfolio's profit.

Moreover, Kurdi explained that the application of IFRS No. 17 had a positive impact on Q1 2023 results, given the improvement of some quantitative economic factors related to insurance risk discount rates, including the rise in interest rates and the increase in the growth rate of the Kingdom's GDP.

As for mergers and acquisitions, Kurdi stated that the insurance sector has a large number of companies, but this does not mean that there are currently feasible opportunities for shareholders to boost the return on investment. This is a key factor that must be followed in market risk analysis.

He stressed that Tawuniya has a very clear strategy that has enabled it to become the largest insurance provider in MENA in terms of GWPs. It aims to develop beyond the traditional insurance system.

Meanwhile, all studies show that the insurance sector is one of the most promising in the Kingdom, given the size of GWPs last year, which amounted to about SAR 53 billion, according to the Saudi Central Bank (SAMA), representing only about 2% of non-oil GDP, the CFO said.

The target contribution of the insurance sector to GDP is about 3% over the next five years, he noted.

Kurdi expects that there will be several opportunities related to economic projects in the Kingdom that will drive the insurance sector growth and raise the level of awareness about basic and optional insurance products for individuals and corporations.

Tawuniya posted a SAR 75 million profit for Q1 2023, against a SAR 13.8 million loss incurred in the corresponding period a year earlier, according to Argaam's data.