Islamic Arab Insurance Faces Financial Challenges
Islamic Arab Insurance Company, also known as Salama, navigates financial hurdles with strategic provisions and a focus on legal recourse.
Summary
Islamic Arab Insurance Company is dealing with significant accumulated losses, primarily due to litigation provisions, currency devaluation, and investment losses. Despite these challenges, the company's strategic actions indicate a potential for recovery.
Islamic Arab Insurance Company, known as Salama, is currently navigating a series of financial challenges that have resulted in significant accumulated losses. As per the latest financial disclosures, the company's accumulated losses have reached AED 440,684,313, which constitutes 46.90% of its paid-up capital. This situation necessitates compliance with regulatory provisions concerning companies with substantial accumulated losses.
The primary factors contributing to these losses include a provision of AED 288,467,043 taken in 2024 against qualified assets linked to ongoing litigation since 2019. Despite the substantial provision, Salama remains committed to pursuing these legal cases to the fullest extent of the law, indicating a proactive approach to resolving these issues.
Additionally, in 2023, the company faced a provision of AED 28.02 million against irrecoverable reinsurance shares related to a significant fire claim. This highlights the challenges faced in the reinsurance sector and the impact of unforeseen events on financial stability.
Another significant factor impacting Salama's financial health is the devaluation of the Egyptian pound against the UAE Dirham, coupled with prevailing inflation rates in Egypt. This led to a goodwill impairment of AED 49 million from its subsidiaries, primarily in Egypt, reflecting the broader economic challenges faced by the region.
The company's 2023 profits were further impacted by unrealized losses on shareholder investments amounting to AED 71.2 million. In addition, provisions of AED 12.01 million for credit losses on other investments and receivables, in accordance with IFRS 9, have added to the financial strain.
Despite these challenges, the future outlook for Salama remains cautiously optimistic. The company's commitment to pursuing legal recourse and its strategic provisions indicate a potential for recovery. However, given the current financial situation, it is advisable for investors to hold their positions in Salama. Monitoring the company's progress in resolving its legal issues and its ability to stabilize its financials will be crucial in determining future investment decisions.
Source
Summary
The document is a compliance form prepared according to the SCA Board of Directors' Decision No. (32/R.M.) of 2019, which mandates that companies with shares listed on the market and accumulated losses amounting to 20% or more of their paid-up capital must comply with specific provisions. The Islamic Arab Insurance Company (SALAMA) has accumulated losses of AED 440,684,313, which is 46.90% of its paid-up capital, as of June 30, 2025. The losses are attributed to several factors: a provision of AED 288,467,043 in 2024 for qualified assets linked to ongoing litigation since 2019, a provision of AED 28.02 million in 2023 for an irrecoverable reinsurance share related to a large fire claim, a goodwill impairment of AED 49 million due to the devaluation of the Egyptian pound and inflation in Egypt, and 2023 profits affected by unrealized losses of AED 71.2 million on shareholder investments and provisions of AED 12.01 million for credit losses, in line with IFRS 9.
