MEDGULF Reports SAR 201.4 Million in Profits for End of 2023

Mediterranean and Gulf Insurance and Reinsurance Co. announced a net profit after zakat attributable to shareholders of 201.4 million riyals for the year ending on December 31, 2023. This marks a significant turnaround from the loss of 396.8 million riyals in the preceding year, as revealed in today’s disclosure of the annual financial results for 2023.

In 2023, insurance revenues reached 3.3 billion riyals, showing a notable increase from 2.6 billion riyals in the previous year, representing a growth of 26%. Additionally, net profits from investment results soared to 106.4 million riyals, a substantial increase from 16.7 million riyals in the previous year, marking a growth of 534.7%.

Earnings per share stood at 1.92 riyals for the past year, a significant improvement from the loss of 3.78 riyals in the previous year.

The increase in insurance revenues is primarily attributed to a rise of SAR 689 million compared to the previous year, representing a growth of 26.07%. This growth was driven by a strong performance in the health business line, which saw a remarkable growth of 32.9%, as well as a significant portion of the 2022 Motor Business being earned in 2023.

During the current year, the company achieved a net income before appropriation and zakat of SAR 206.255 million, a stark contrast to the loss of SAR 405.856 million in the previous year. After zakat, the net income amounted to SAR 201.472 million, in contrast to the loss of SAR 396.870 million in the previous year. These improvements can be attributed to the following main reasons:

• An improvement in the insurance service result of SR 672.2 million compared to the previous year. This improvement was driven by an increase in insurance revenue of SR 689.03 million, a growth of 26.07%, coupled with a more modest increase in the insurance service expense of 3.99% or SR 115.8 million compared to the previous year. This was a direct result of improved underwriting policies and cost containment.

• A significant increase in net investment income in the profit and loss account of SAR 89.7 million compared to the previous year.

Starting January 1, 2023, the company adopted IFRS 17 (Insurance Contracts) and IFRS 9 (Financial Instruments), as endorsed in Saudi Arabia, with retrospective application. This change has materially affected the presentation of financial results from Q1 2023 onwards, with comparative periods restated under the new standards.

Earnings per share (EPS) for the current year stand at SR 1.92, a significant improvement from the SR 3.78 loss per share in the previous year. This calculation is based on dividing the net income amount of SR 201.5 million by the weighted average number of ordinary outstanding shares of 105 million for the current period, and SR 396.8 million (loss) over 105 million shares for the previous year.

As of December 31, 2023, the company’s accumulated losses decreased to 24.5%, an improvement of over 19 percentage points from what it was at December 31, 2022, recording 43.7% of its subscribed capital. Additionally, as of the same date, the company’s solvency coverage exceeded 77%, an improvement of more than 64 percentage points compared to December 31, 2022, although it remains below the prudential solvency requirements