Half Year 2026 Arabia Falcon Insurance Co SAOC Earnings Call
Ahmad Al Tayeb: I welcome everybody here on the floor. I think everybody is on mute. We will leave the question until the end. It will take roughly 15 to 30 minutes, and we will open the floor for any question that attendees may have. We will go over the performance. Just to make sure everybody is hearing me. The sound is okay? Lamia, can you hear me? The sound is fine?
Ahmad Al Tayeb: I welcome everybody here on the floor. I think everybody is on mute. We will leave the question until the end. It will take roughly 15 to 30 minutes, and we will open the floor for any question that attendees may have. We will go over the performance. Just to make sure everybody is hearing me. The sound is okay? Lamia, can you hear me? The sound is fine?
Speaker #1: I work at Novara Body Haze on the floor. I think everybody is unmuted. We'll leave the questions until the end. So, it will take roughly 15 to 30 minutes, and we'll open the floor for any questions that attendees may have.
Speaker #1: We'll go over the performance of— Now, just to make sure everybody is hearing me: Is the sound okay? Lamia, can you hear me? Is the sound fine?
Speaker #2: Yes, it's recorded. We can all hear you clearly.
Lamya Al Zadjali: Yes, Mr. Ahmed. We can all hear you clearly.
Ahmad Al Tayeb: Yes, Mr. Ahmed. We can all hear you clearly.
Speaker #1: Okay. With me today, my name is Ahmad Al-Tayeb. I'm the Chief Financial Officer for Arabia Falcon Insurance. Also with us is Lamia Zajali, who is the Board Secretary.
Ahmad Al Tayeb: You have with you, my name is Ahmad Al-Tayeb. I am the Chief Financial Officer for Arabia Falcon Insurance, and we have with us Lamia Al-Zajali. She is the Board Secretary. We can start right now.
Ahmad Al Tayeb: You have with you, my name is Ahmad Al-Tayeb. I am the Chief Financial Officer for Arabia Falcon Insurance, and we have with us Lamia Al-Zajali. She is the Board Secretary. We can start right now.
Speaker #1: And we can start right now. So, we'll go over the financial performance for the first half of the year, and we'll see how things are developing toward the end of the year, and the projection of the management toward the end of the year.
Ahmad Al Tayeb: We will go over the financial performance for the H1 of the year, and we will see how things are developing towards the end of the year and the projection of the management towards the end of the year. The agenda will include, first, we will go over P&L and profitability. Then we will see our insurance portfolio in term of production and top line. The technical KPIs achievement in the H1 and the investment income, which are these component of our, profit and loss for the H1 of the year. Included here, the H1 of the year with comparable results for the last three years from 2024, 2025, and 2026. We will go over these results one by one now. Please, if you have any questions, keep notes so we can discuss at the end of the presentation.
Ahmad Al Tayeb: We will go over the financial performance for the H1 of the year, and we will see how things are developing towards the end of the year and the projection of the management towards the end of the year. The agenda will include, first, we will go over P&L and profitability. Then we will see our insurance portfolio in term of production and top line. The technical KPIs achievement in the H1 and the investment income, which are these component of our, profit and loss for the H1 of the year. Included here, the H1 of the year with comparable results for the last three years from 2024, 2025, and 2026. We will go over these results one by one now. Please, if you have any questions, keep notes so we can discuss at the end of the presentation.
Speaker #1: So, the agenda will include: first, we'll go over P&L and profitability; then we'll see our insurance portfolio in terms of production and top line; the technical KPIs achievement in the first half; and the investment income, which are these components of our profit and loss for the first half of the year.
Speaker #1: Included here is the first half of the year, with comparable results for the last three years from 2024, 2025, and 2026, and we'll go over these results one by one now.
Speaker #1: And please, if you have any questions, keep notes so we can discuss at the end of the presentation. In terms of performance for the first half, our gross written premium decreased by 8% to 17 million, compared to 15.7 million first half last year.
Ahmad Al Tayeb: In term of performance for the H1, our gross written premium decreased by 8% to OMR 17 million, compared to OMR 15.7 million H1 last year. The decrease was mainly because of exiting the medical business, in the H2 of 2025. We have in our last year comparable result, we have medical business. This year, we do not have medical business because of the strategic exit of medical line of business. This constitute to already almost OMR 2 million. Last year was booked as medical business, and this year we booked already the Facultative Reinsurance in medical business, which the difference is OMR 2 million. If we factor the medical business, we have a growth in production year-on-year. The insurance revenue decreased by 3%. Our net insurance service result, inclusive of other financing expenses, decreased to OMR 306,000 in 2025.
Ahmad Al Tayeb: In term of performance for the H1, our gross written premium decreased by 8% to OMR 17 million, compared to OMR 15.7 million H1 last year. The decrease was mainly because of exiting the medical business, in the H2 of 2025. We have in our last year comparable result, we have medical business. This year, we do not have medical business because of the strategic exit of medical line of business. This constitute to already almost OMR 2 million. Last year was booked as medical business, and this year we booked already the Facultative Reinsurance in medical business, which the difference is OMR 2 million. If we factor the medical business, we have a growth in production year-on-year. The insurance revenue decreased by 3%. Our net insurance service result, inclusive of other financing expenses, decreased to OMR 306,000 in 2025.
Speaker #1: The decrease was mainly because of exiting the medical business in the second half of 2025, so in our last year's comparable results we had the medical business. This year, we don't have the medical business because of the strategic exit from the medical line of business.
Speaker #1: This constitutes already almost 2 million. Last year was booked as medical business, and this year we booked already the FAC in medical business, with the difference being 2 million.
Speaker #1: So, if we factor in the medical business, we have growth in production year on year. The insurance revenue decreased by 3%. Our net insurance service result, inclusive of other financing expenses, decreased to 306,000 in 2025.
Speaker #1: It was a 259,000 loss in 2026, compared with 3,006 in the first half of last year. So we had a loss in terms of net technical results, including the operating expenses.
Ahmad Al Tayeb: It was to OMR 259,000 loss in 2026, compared with OMR 3,006 in H1 of last year. We had a loss in term of net technical results, including the operating expenses. Investment income decreased by 6% to almost OMR 1.3 million from OMR 1.4 million. We will go over the elements in the next slides. Net profit for the H1 was OMR 490,000. Net profit after tax, compared with almost OMR 1 million in the same period last year. Shareholder equities increased to OMR 23 million, at the end of 30 June 2026, compared with OMR 22 million, almost OMR 1 million increase. During the H1, the company paid OMR 1.2 million, 12 baisa per share distributed to shareholders.
Ahmad Al Tayeb: It was to OMR 259,000 loss in 2026, compared with OMR 3,006 in H1 of last year. We had a loss in term of net technical results, including the operating expenses. Investment income decreased by 6% to almost OMR 1.3 million from OMR 1.4 million. We will go over the elements in the next slides. Net profit for the H1 was OMR 490,000. Net profit after tax, compared with almost OMR 1 million in the same period last year. Shareholder equities increased to OMR 23 million, at the end of 30 June 2026, compared with OMR 22 million, almost OMR 1 million increase. During the H1, the company paid OMR 1.2 million, 12 baisa per share distributed to shareholders.
Speaker #1: Investment income decreased by 6%, to almost 1.3 million from 1.4 million. We'll go over the elements in the next slides. Net profit for the first half was 490,000.
Speaker #1: Net profit after tax compared with almost $1 million in the same period last year. Shareholder equities increased to $23 million at the end of June 30, 2026, compared with $22 million—a nearly $1 million increase.
Speaker #1: During the first half, the company paid 1,200,000, 12 pays per share, distributed to shareholders. Now, in terms of breakdown of the first half results, for Q1 standalone and Q2 standalone, and the first half that we spoke about before, so you can see, like, we start the start of the year was rough.
Ahmad Al Tayeb: Now, in term of breakdown of the H1 results, for Q1 standalone and the Q2 standalone, and the H1 that we spoke about before. We can see, the start of the year was rough. We ended the H1 with net loss after tax of OMR 80,000. However, there is recovery was done in Q3. The Q2 standalone net profit was OMR 571,000, which brought the H1 year to date to OMR 491,000. Main reason for the profitability improvement in Q2 was controlling the motor loss ratio, which decreased to 80% year to date, compared with 89% at the end of Q1. In addition to the improvement in investment income that grew to OMR 500,000, from OMR 500,000 in Q1 to OMR 800,000 in Q2 standalone. Now we go to the production in term of our portfolio.
Ahmad Al Tayeb: Now, in term of breakdown of the H1 results, for Q1 standalone and the Q2 standalone, and the H1 that we spoke about before. We can see, the start of the year was rough. We ended the H1 with net loss after tax of OMR 80,000. However, there is recovery was done in Q3. The Q2 standalone net profit was OMR 571,000, which brought the H1 year to date to OMR 491,000. Main reason for the profitability improvement in Q2 was controlling the motor loss ratio, which decreased to 80% year to date, compared with 89% at the end of Q1. In addition to the improvement in investment income that grew to OMR 500,000, from OMR 500,000 in Q1 to OMR 800,000 in Q2 standalone. Now we go to the production in term of our portfolio.
Speaker #1: We ended the first half with a net loss after tax of $80,000. However, there was a recovery in Q3, and the second quarter standalone net profit was $571,000, which brought the first half year-to-date to $491,000.
Speaker #1: The main reason for the profitability improvement in Q2 was controlling the motor loss ratio, which decreased to 80% year to date compared with 89% at the end of the first quarter.
Speaker #1: In addition to the improvement in investment income, which grew from 500,000 in Q1 to 800,000 in Q2 standalone. Now we go to the production.
Speaker #1: In terms of our portfolio, our motor production for the first half increased by 13% compared to the same period last year. It was the main contributor to profitability for the first half.
Ahmad Al Tayeb: Our motor production for the H1 increased 13% compared to the same period last year. It was main contributor for the profitability for the first time. Medical, we had, as mentioned before, their strategic exit resulted in OMR 1.5 million decrease in net premium of medical. As you are aware now, the regulator introduced category A and category B for medical insurance business. Arabia Falcon Insurance was classified as category B, so we don't issue directly medical business now. We just take share from other companies who are issuing medical business. Life insurance, after a couple of year, double-digit growth stabilized. The growth stabilized to 4%, and we expect this to be stable in the coming future. The only decline was in the property and casualty business, which dropped 5% due to a few projects that ended during the H1 and was not renewed, like engineering projects.
Ahmad Al Tayeb: Our motor production for the H1 increased 13% compared to the same period last year. It was main contributor for the profitability for the first time. Medical, we had, as mentioned before, their strategic exit resulted in OMR 1.5 million decrease in net premium of medical. As you are aware now, the regulator introduced category A and category B for medical insurance business. Arabia Falcon Insurance was classified as category B, so we don't issue directly medical business now. We just take share from other companies who are issuing medical business. Life insurance, after a couple of year, double-digit growth stabilized. The growth stabilized to 4%, and we expect this to be stable in the coming future. The only decline was in the property and casualty business, which dropped 5% due to a few projects that ended during the H1 and was not renewed, like engineering projects.
Speaker #1: Medical, we had, as mentioned before, a strategic exit. This resulted in a 1.5 million decrease in net premium for medical. As you are aware, the regulator has now introduced Category A and Category B for the medical insurance business, and Arabia Falcon was classified as Category B.
Speaker #1: So, we don't issue medical business directly now; we just take a share from other companies who are issuing medical business. Life insurance, after a couple of years of double-digit growth, stabilized—the growth stabilized to 4%, and we expect this to be stable in the coming future.
Speaker #1: The only decline was in the Property and Casualty business, which dropped 5% due to a few projects that ended during the first half and were not renewed, like engineering projects.
Speaker #1: It's not really a decrease in the premium; it's just because of the project end. Now, related to technical KPIs, mainly we have good improvement in motor loss ratio.
Ahmad Al Tayeb: It's not really decrease in the premium, it's just because of the project end. Now related to technical KPIs. Mainly we have good improvement in motor loss ratio. We are seeing improvement during the year. Even in July, August, this improved further. Motor loss ratio now at end of June it was 80%, improvement from 89% at the end of Q1. We're expecting further improvement toward the year-end. Already July and August showed good improvement, and we're expecting Q3 and Q4 better improvement towards probably the low 70s. Other than motor, all other core functions are good. Aside from motor, all other lines are performing within acceptable technical parameters. Reinsurance structure, pricing adequacy, and expense ratio across the remaining book are stable and well managed. Now, the plan for the H2 of the year.
Ahmad Al Tayeb: It's not really decrease in the premium, it's just because of the project end. Now related to technical KPIs. Mainly we have good improvement in motor loss ratio. We are seeing improvement during the year. Even in July, August, this improved further. Motor loss ratio now at end of June it was 80%, improvement from 89% at the end of Q1. We're expecting further improvement toward the year-end. Already July and August showed good improvement, and we're expecting Q3 and Q4 better improvement towards probably the low 70s. Other than motor, all other core functions are good. Aside from motor, all other lines are performing within acceptable technical parameters. Reinsurance structure, pricing adequacy, and expense ratio across the remaining book are stable and well managed. Now, the plan for the H2 of the year.
Speaker #1: And we are seeing improvement during the year, even in July-August; this improved further. Motor loss ratio now, at the end of June, was 80%.
Speaker #1: Improved from 89% at the end of Q1, and we're expecting further improvement toward the year end. Already, July and August showed good improvement, and we're expecting Q3 and Q4 to see even better improvement, possibly toward the low 70s.
Speaker #1: Other than motor, all other core foundations are good. Aside from motor, all other lines are performing within acceptable technical parameters. Reinsurance structure, pricing adequacy, and expense ratio across the remaining book are stable and well managed.
Speaker #1: Now, the plan for the second half of the year—the management plan—is to control claims and further improve the loss ratio, especially in the motor line of business.
Ahmad Al Tayeb: The management plan is to control claims and further improve the loss ratio, especially in the motor line of business. There are many initiatives started earlier in the year and continue toward the end of the year. Other than that, we'll try to achieve the targeted budget production growth by year-end. We need to have positive growth year over year, inclusive of the medical exit. We need to compensate for the loss of medical business by increasing other line of businesses. As normal, just keep managing the expenses to protect our bottom line delivery and sustain our good investment income to achieve higher than target investment income by year-end. Now in term of investment income, very brief summary. As you are all aware, last two years witnessed decline in investment rates, investment interest.
Ahmad Al Tayeb: The management plan is to control claims and further improve the loss ratio, especially in the motor line of business. There are many initiatives started earlier in the year and continue toward the end of the year. Other than that, we'll try to achieve the targeted budget production growth by year-end. We need to have positive growth year over year, inclusive of the medical exit. We need to compensate for the loss of medical business by increasing other line of businesses. As normal, just keep managing the expenses to protect our bottom line delivery and sustain our good investment income to achieve higher than target investment income by year-end. Now in term of investment income, very brief summary. As you are all aware, last two years witnessed decline in investment rates, investment interest.
Speaker #1: There are many initiatives that started earlier in the year and will continue toward the end of the year. Other than that, we'll try to achieve the targeted budgeted production growth by year end.
Speaker #1: So, we need to have positive growth year over year, inclusive of the medical exit. Therefore, we need to compensate for the loss of the medical business by increasing other lines of business.
Speaker #1: As normal, just keep managing the expenses to protect our bottom-line delivery, and sustain our good investment income to achieve higher-than-target investment income by year-end.
Speaker #1: Now, in terms of investment income, very, very brief summary. As you are all aware, the last two years have witnessed a decline in investment rates. Investment interest, and in addition to the recent geopolitical risk, has affected the portfolio, as the bank deposits this year are paying less interest compared to last year and the previous years.
Ahmad Al Tayeb: In addition to the recent geopolitical risk, this affected the portfolio as the bank deposits this year is paying less interest rate compared to last year and the previous years. The bond rates declined too because of the Federal Reserve decrease in the interest rates. Just to figure apple to apple, last two years, the interest rate declined by 36%. However, in spite of the decline in interest rates, as most of our portfolio, more over than 90% of our portfolio are in fixed deposits and bonds, which is fixed income. This is very sensitive to interest rates in the market. In spite of the decrease of 36% in absolute interest rate in the last two years, we managed that this year for total investment income to be only 6% compared to previous year.
Ahmad Al Tayeb: In addition to the recent geopolitical risk, this affected the portfolio as the bank deposits this year is paying less interest rate compared to last year and the previous years. The bond rates declined too because of the Federal Reserve decrease in the interest rates. Just to figure apple to apple, last two years, the interest rate declined by 36%. However, in spite of the decline in interest rates, as most of our portfolio, more over than 90% of our portfolio are in fixed deposits and bonds, which is fixed income. This is very sensitive to interest rates in the market. In spite of the decrease of 36% in absolute interest rate in the last two years, we managed that this year for total investment income to be only 6% compared to previous year.
Speaker #1: And the bond, bond, bond rates declined too because of the Fed decrease in the interest rate. So just to compare apple to apple, over the last two years the interest rate declined by 36%.
Speaker #1: However, in spite of the decline in interest rate, as most of our portfolio more over than 90% of our portfolio are in fixed deposits, fixed deposit and bonds, which is fixed income.
Speaker #1: It's very sensitive to interest rates in the market. In spite of the decrease of 36% in absolute interest rates in the last two years, we managed this year for total investment income to be only 6% less compared to the previous year.
Speaker #1: And this is because of the active management of the portfolio and the reallocation of the portfolio between short-term and long-term, changing the duration of the portfolio to just generate more investment income.
Ahmad Al Tayeb: This because of the active management of the portfolio and reallocation of the portfolio between short term and long term, changing the duration of the portfolio to just generate more investment income. Our investment income stands 9% above the target we got during the year. We are expecting this to sustain toward the year-end. Now we have investment portfolio allocation. We allocated. Now we have 47% of our portfolio is in short and long-term bonds. Last year was 30%, so we increased it to 47%. This is how we managed to increase the investment income in spite of the decline in the interest rates. Our bonds generating now 53% of our total investment income. We will continue working on the investment portfolio mix, depending on the market conditions. Now, the outlook for H2 of the year.
Ahmad Al Tayeb: This because of the active management of the portfolio and reallocation of the portfolio between short term and long term, changing the duration of the portfolio to just generate more investment income. Our investment income stands 9% above the target we got during the year. We are expecting this to sustain toward the year-end. Now we have investment portfolio allocation. We allocated. Now we have 47% of our portfolio is in short and long-term bonds. Last year was 30%, so we increased it to 47%. This is how we managed to increase the investment income in spite of the decline in the interest rates. Our bonds generating now 53% of our total investment income. We will continue working on the investment portfolio mix, depending on the market conditions. Now, the outlook for H2 of the year.
Speaker #1: Our investment income stands 9% above the target we set during the year, and we're expecting this to be sustained through year end. Now, we have the investment portfolio allocation.
Speaker #1: We allocated or now we have 7 47% of our portfolio is in short and long term bonds. Last year was 30%. So we increased it to 40%, 47%.
Speaker #1: This is how we managed to increase the investment income in spite of the decline in the interest rates. Our bonds are now generating 53% of our total investment income.
Speaker #1: We will continue working on the investment portfolio mix depending on market conditions. Now, the outlook for the second half of the year: we expect this year to be challenging because of the geopolitical risk that the region is facing.
Ahmad Al Tayeb: We expect this year to be challenging because of geopolitical risk that the region is facing. Technical profitability investment income are expected to improve toward the year-end. So probably we will try to achieve the same profitability or close to the same profitability we achieved last year. Management recently, last two years, implemented necessary measure to address raising claims, especially motor claims. So we are adjusting the portfolio and adjusting the pricing, the portfolio mix, to achieve higher profitability over the year-end. Other line of business are performing as normal. It is profitable business, and we expect to continue the profitable business for H2 of the year and the coming years.
Ahmad Al Tayeb: We expect this year to be challenging because of geopolitical risk that the region is facing. Technical profitability investment income are expected to improve toward the year-end. So probably we will try to achieve the same profitability or close to the same profitability we achieved last year. Management recently, last two years, implemented necessary measure to address raising claims, especially motor claims. So we are adjusting the portfolio and adjusting the pricing, the portfolio mix, to achieve higher profitability over the year-end. Other line of business are performing as normal. It is profitable business, and we expect to continue the profitable business for H2 of the year and the coming years.
Speaker #1: Technical profitability and investment income are expected to improve toward the year-end. So, we will probably try to achieve the same profitability, or close to the same profitability, that we achieved last year.
Speaker #1: Management recently, in the last two years, implemented necessary measures to address rising claims, especially motor claims. So we're adjusting the portfolio and adjusting the pricing—the portfolio mix—to achieve higher profitability over the year end.
Speaker #1: And other lines of business are performing as normal. It's a profitable business, and we expect to continue the profitable performance for the second half of the year and in the coming years.
Speaker #1: Now, management is committed to keeping growing the investment, to keep growing the insurance portfolio, and to keep growing both the top and bottom line. We will maintain control over expenses and continue active management of the investment portfolio to contribute positively to the bottom line of the company.
Ahmad Al Tayeb: Management is committed to keep growing the investment, to keep growing the insurance portfolio, and keep it growing both top and bottom line, and maintain control over expenses, and continue active management of investment portfolio to contribute positively to the bottom line of the company. Currently, company is in the mid of implementing a new core insurance system as a part of the company strategy of digital transformation. We are expecting by year-end, the system to be ready, and we plan to start the new system next year in 2027. That is it for the brief financial results, and we will open the floor for any questions that you might have. So please unmute yourself when you want to ask question, and we are ready to answer. Any questions? If you have any issue, you can raise your hand.
Ahmad Al Tayeb: Management is committed to keep growing the investment, to keep growing the insurance portfolio, and keep it growing both top and bottom line, and maintain control over expenses, and continue active management of investment portfolio to contribute positively to the bottom line of the company. Currently, company is in the mid of implementing a new core insurance system as a part of the company strategy of digital transformation. We are expecting by year-end, the system to be ready, and we plan to start the new system next year in 2027. That is it for the brief financial results, and we will open the floor for any questions that you might have. So please unmute yourself when you want to ask question, and we are ready to answer. Any questions? If you have any issue, you can raise your hand.
Speaker #1: And currently, company is in the phase mid mid of implementing a new core insurance systems as a as a part of the company strategy of digital transformation.
Speaker #1: And we're expecting by year end the the system to be ready and we plan to implement to plan to start the new system next year in 2027.
Speaker #1: That's it for the brief financial results, and we'll open the floor for any questions that you might have. So, please unmute yourself when you want to ask a question, and we're ready to answer.
Speaker #1: Any questions? If you have any issue, like with the car, raise your hand. I mean, I don't know if somebody is speaking, but we didn't receive any question till now.
Ahmad Al Tayeb: I don't know if somebody is speaking, but we didn't receive any question till now. I see everybody is on mute, so please, before speaking, unmute yourself or raise your hand if you are facing any issue. All right. In case there's no question, we'll close the meeting. Thank you, everyone, for attending. In case if you have any question later on, you can email the investment relationship officer. The email is on our website. We will be happy to answer any questions that come to your mind later. You can contact me directly to my email. We'll be happy to answer your questions. You can find all the contacts on our websites. Thank you very much, everyone, and I wish you a very good remaining of the day. Thank you very much. Lamia Al-Zajali, we close the meeting right now, and yeah.
Ahmad Al Tayeb: I don't know if somebody is speaking, but we didn't receive any question till now. I see everybody is on mute, so please, before speaking, unmute yourself or raise your hand if you are facing any issue. All right. In case there's no question, we'll close the meeting. Thank you, everyone, for attending. In case if you have any question later on, you can email the investment relationship officer. The email is on our website. We will be happy to answer any questions that come to your mind later. You can contact me directly to my email. We'll be happy to answer your questions. You can find all the contacts on our websites. Thank you very much, everyone, and I wish you a very good remaining of the day. Thank you very much. Lamia Al-Zajali, we close the meeting right now, and yeah.
Speaker #1: I see everybody is on mute, so please, before speaking, unmute yourself. Or raise your hand if you are facing any issues. All right.
Speaker #1: In case there are no questions, we'll close the meeting. So, thank you everyone for attending. If you have any questions later on, you can email the Investor Relations Officer—the email is on our website.
Speaker #1: And we will be happy to answer any questions that come to your mind later. You can contact me directly at my email.
Speaker #1: And we'll be happy to answer your questions. You can find all the contact information on our website. Thank you very much, everyone. I wish you a very good rest of the day.
