Arqaam Capital issues a "Buy" recommendation for Saudi Re

The Investment bank's report highlighted the 'Saudi Re' strong brand and market position in the market


Riyadh: Arqaam Capital Investment Co. has recommended the purchase of Saudi Reinsurance Co., ‘Saudi Re’, a leading reinsurance company in the Middle East and North Africa, at a target price of SR 10.3 per share.

In its report, Arqaam Capital confirmed that the Saudi Exchange -listed Company  ‘Saudi Re’ witnessed improving profitability, has a strong underwriting track record, along with an A3 rating and a stable outlook (Moody's Investors Service Inc.).

The report stated: “The target price of ‘Saudi Re' shares is considered a 44% growth opportunity on the current market price, in the framework of the anticipated valuation on P/tNAV. It is expected that return on equity (RoE) will increase to 6.5% during the current fiscal year, with the local and international growth, and improved investment yields and underwriting markets."

The Investment bank’s report highlighted the 'Saudi Re' strong brand and market position in the market, given it is the sole reinsurer in Saudi Arabia and has a growing presence in its target markets of the Middle East, Asia, Africa and Lloyd's.

The prime investment features of 'Saudi Re', according to the report, include its preferential position in the local insurance market, the quality of its strong assets in its conservative investment portfolio, good capital adequacy with relatively modest exposure to natural catastrophe risk, strong financial flexibility with non-existent leverage, broad investor base, and good access to capital markets in the Kingdom of Saudi Arabia.

'Saudi Re’ is considered  a leading reinsurance company in the MENA region, providing risk transfer solutions to insurance companies in more than 40 markets across the Middle East, Asia, and has a paid up capital of SR 810 million (US$216 million).

Saudi Re, which is listed on the Saudi Exchange Market, offers treaty and facultative reinsurance solutions in engineering, property, marine, casualty, motor, life and health. 

‘Headquartered in Riyadh, Saudi Arabia, where it was founded in 2008 as the first reinsurance company in the Saudi market, Saudi Re is presently rated an A3 insurance financial strength rating (IFSR) by Moody's with a stable outlook.

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