Islamic Arab Insurance Co. (Salama), a leading provider of Shari’a-compliant insurance solutions in the UAE, has announced a significant move to reduce its capital. This decision, approved during the General Assembly Meeting on October 16, 2025, involves a reduction of AED 456,567,815 from the company's share capital.

The capital reduction will be achieved through the cancellation of 439,737,326 shares on a pro-rata basis and the utilization of AED 4,123,829 from the statutory reserve to offset remaining accumulated losses. This strategic action is aimed at extinguishing the accumulated losses amounting to AED 443,861,155, positioning the company for a more stable financial future.

This move is crucial for Salama as it seeks to strengthen its financial position and enhance shareholder value. By addressing accumulated losses, the company aims to improve its balance sheet and create a more sustainable platform for future growth.

For investors, this development presents a mixed picture. On one hand, the reduction in capital and the addressing of accumulated losses can be seen as a positive step towards financial health. On the other hand, the reduction in the number of shares may affect share value in the short term. Given these considerations, investors might be inclined to adopt a 'hold' strategy, awaiting further developments and stability in Salama's financial performance.

Overall, Salama's decision to reduce its capital is a strategic move towards financial stabilization. While the immediate effects might include fluctuations in share value, the long-term outlook remains optimistic as the company works towards strengthening its financial foundation. Investors should keep a close eye on Salama's future announcements and financial results to make informed decisions.