Walaa forecast to see improved results in Q2 2021, says CEO

 Johnson Varughese, CEO of Walaa Cooperative Insurance 

Walaa Cooperative Insurance Co. will likely report better results in Q2 2021, chief executive officer (CEO) Johnson Varughese told Argaam.

“Walaa widened Q1 2021 losses due to an increase of SAR 42.5 million in auto claims incurred and an increase of SAR 11.5 million in total medical insurance claims, weighing on net claims and other benefits,” he added.

Varughese attributed an increase in claims to the Kingdom’s lockdown measures related to the COVID-19 outbreak in Q1 2021, indicating that the three-month period witnessed higher rate of accidents.

Additionally, Walaa received several claims on Suez Canal closure -- as a stranded container carrier blocked traffic – indicating that these claims may be settled at lower actual amounts.

“We paid a 15% value-added tax (VAT) to settle third-party claims in car accidents, which was not taken into account when determining the policy premium,” he noted.

Walaa seeks to expand into lower-risk medical coverage business, which may weigh on profitability, since the insurer will need to set aside provisions to balance its business portfolio.

“We have already adopted a prudent policy for provisions due to the medical business portfolio growth,” Varughese indicated, adding that other underwriting expenses increased by SAR 14.75 million due to a change in the invoicing method of some services.

Walaa’s net loss before Zakat widened to SAR 27.8 million in Q1 2021, compared to SAR 16.2 million in the year-earlier period, Argaam reported.