Walaa Insurance CEO says increase in motor claims led to Q2 profit decline

Johnson Varughese, CEO of Walaa Cooperative Insurance Co.

Walaa Cooperative Insurance Co. reported lower profit in the second quarter of 2021 due to an increase in gross claims incurred for motor line by SAR 79 million, a surge of 119.2% year-on-year, due to the lockdown imposed in the Kingdom to prevent the spread of COVID-19, Chief Executive Officer (CEO) Johnson Varughese told Argaam in an exclusive.

He added that gross claims incurred for the medical line increased due to the rise in the insurance premiums written for the medical insurance product, in line with the company’s vision to expand in this product.

“Further, other underwriting income decreased by 99.5%, or SAR 8 million, mainly due to a reduction in Haj and Umrah business due to lower foreign visitors due to COVID-19 situation,” Varughese said.

Elsewhere, the CEO noted that the rise in other underwriting expenses is due to a change of billing model of some services provided by Najm Co., in which those expenses were booked under other underwriting expenses upon policy issuance.

These expenses were previously charged based on accident occurrence and were recorded under expenses related to claims.

The company’s share of the motor line insurance business stood at 6.4% in Q1 2021, Varughese said.

“We are not able to provide information related to the insurance market for Q2 2021, considering that the deadline to upload companies’ financial statements is not yet due.”

When asked about the demand for the compulsory travel insurance product for Saudi citizens traveling abroad, Varughese said the company cannot comment currently as the traveling flow is not yet fully opened.

“We will be able to have more clarity in the coming period, but we surely expect this product to grow in the future, not due to covering COVID-19 risks, but became consumers are more aware of this product and its potential benefit,” he added.

The company is expected to post better results in the third quarter of 2021, the CEO concluded.

Walaa reported a net loss of SAR 20.7 million in H1 2021, compared to a profit of SAR 13.6 million in the same period last year.