Itqan Capital maintained its “Neutral” recommendation for The Company for Cooperative Insurance (Tawuniya) with an adjusted target price of SAR 85.5 per share.
The insurer will continue to face a challenging near term outlook amid an exodus of expatriates and rising competitive pressures. However, strong growth potential is seen in the long term.
Tawuniya’s Q3 2020 results were not surprising as the firm was bound to witness a slowdown in gross written premium (GWP) amid an economic slowdown and rising competitive pressures.
On the premiums side, the company’s new Umrah segments should resume operations with the resumption of Umrah for international visitors in November, thus providing some support to net underwriting income in the coming quarters.
Expats departure, rising competitive pressures leading to market share losses, and a slowdown in vehicles sales remain key risks for Tawuniya in the short term.
However, market consolidation and market share gains from smaller players, coupled with low penetration of insurance in the Kingdom and a more demanding regulatory environment, provides Tawuniya with much potential for growth on the long run, the brokerage noted.
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