In a strategic move to stabilize its financial footing, the Islamic Arab Insurance Company PJSC, commonly known as SALAMA, has announced a significant reduction in its share capital. This decision, approved during the general assembly meeting on October 16, 2025, aims to address the company's accumulated losses, which have been a lingering challenge for the organization.

The company plans to reduce its issued share capital from AED 939,588,998 to AED 483,021,183. This reduction will be executed by extinguishing accumulated losses amounting to AED 443,861,155 through the cancellation of shares on a pro-rata basis. Additionally, the company will cancel treasury shares as part of this process. The capital reduction is slated to take effect on December 8, 2025.

This move is part of a broader strategy to enhance the financial health of SALAMA by eliminating historical losses from its balance sheet. By doing so, the company aims to present a cleaner financial statement, potentially boosting investor confidence and setting the stage for future capital increases.

From an investment perspective, this development requires careful consideration. While the reduction in capital is a proactive step towards financial stability, it also reflects the challenges SALAMA has faced in recent times. Investors should weigh the potential for future growth against the backdrop of the company's current financial restructuring.

Given the current circumstances, a 'hold' position might be advisable for existing shareholders. This allows investors to observe how the company's financial restructuring unfolds and how it impacts SALAMA's market performance. Potential investors, on the other hand, might want to wait for further clarity on the company's strategic direction and financial performance post-restructuring.