Arqaam Capital places Saudi Re among preferred picks, and sets target price at SAR 11

It has also revised the target price higher to SAR 11 per share based on further improvement in margins and more sustainable investment yields

  

Riyadh :- Arqaam Capital maintained a “Buy” recommendation on Saudi Reinsurance CompanySaudi Re” (TASI:8200), placing the sole national reinsurer amongst its preferred picks in the Saudi insurance sector. It has also revised the target price higher to SAR 11 per share based on further improvement in margins and more sustainable investment yields.

In a recent report, the DIFC-based investment bank said the Tadawul-listed reinsurer is on track to further improve its underwriting margins, which is in line with its previous expectations. Further, Arqaam Capital expects underwriting margin to reach 4.2% by 2023, supported by further optimization and geographical diversification in Saudi Re’s business portfolio.

Also, Arqaam Capital pointed out that Saudi Re’s improved credit rating coupled with the retreat of some of its competitors have availed new market share opportunities. Despite written premium slowdown by -4% CAGR in the last two years, Saudi Re outperformed peers of globally listed reinsurers with similar market cap and portfolio size, showing improved combined ratios by 5% compared to an 8% worsening for peers.

Saudi Re’s investment returns achieved a growth of 59% in the first nine months of 2019 compared to the same period last year. “We welcome the reinsurer’s decision to increase its share of fixed income holding to 79% in 2019 to ease volatility” Arqaam Capital said.

The stock target price represents an upside of 15% from the market price, which trades below its book value at price to book value of 0.9, a valuation that does not reflect the improved earnings visibility, according to Arqaam Capital.

Arqaam Capital announced the initiation of Saudi Re coverage in June this year, recommending a "Buy" with a target price of SAR 10.30.

Saudi Re is the first reinsurance company based in Saudi Arabia and specializes reinsurance solutions in engineering, property, marine, casualty, motor, life and health.

© Press Release 2020

Disclaimer: The contents of this press release was provided from an external third party provider. This website is not responsible for, and does not control, such external content. This content is provided on an “as is” and “as available” basis and has not been edited in any way. Neither this website nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this press release.

The press release is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Neither this website nor our affiliates shall be liable for any errors or inaccuracies in the content, or for any actions taken by you in reliance thereon. You expressly agree that your use of the information within this article is at your sole risk.

To the fullest extent permitted by applicable law, this website, its parent company, its subsidiaries, its affiliates and the respective shareholders, directors, officers, employees, agents, advertisers, content providers and licensors will not be liable (jointly or severally) to you for any direct, indirect, consequential, special, incidental, punitive or exemplary damages, including without limitation, lost profits, lost savings and lost revenues, whether in negligence, tort, contract or any other theory of liability, even if the parties have been advised of the possibility or could have foreseen any such damages.


More From Press Releases