Salama Faces Financial Challenges Amid Strategic Moves
Islamic Arab Insurance Co. (Salama) confronts financial hurdles as accumulated losses surpass 46% of paid-up capital.
Summary
Salama, facing significant financial challenges, is taking strategic steps to address its accumulated losses and looks towards a positive future.
Islamic Arab Insurance Company, commonly known as Salama, is currently navigating through turbulent financial waters. As of September 30, 2025, the company's accumulated losses have reached AED 440,288,300, equating to 46.86% of its paid-up capital. This development has triggered compliance with the SCA Board of Directors' Decision No. (32/R.M.) of 2019, which mandates specific procedures for companies whose losses exceed 20% of their paid-up capital.
The financial strain on Salama can be attributed to several key factors. A significant provision of AED 288,467,043 was taken in 2024 against qualified assets linked to ongoing litigation since 2019. Despite these challenges, Salama remains committed to pursuing these legal cases to the fullest extent of the law, indicating a proactive approach to mitigating these financial burdens.
Additionally, the company faced a provision of AED 28.02 million in 2023 due to an irrecoverable reinsurance share related to a substantial fire claim. Moreover, the devaluation of the Egyptian pound against the UAE Dirham, coupled with inflationary pressures in Egypt, necessitated a goodwill impairment of AED 49 million from its subsidiaries, primarily in Egypt.
Salama's 2023 profits were further impacted by unrealized losses on shareholder investments amounting to AED 71.2 million, alongside provisions of AED 12.01 million for credit losses on other investments and receivables, following IFRS 9 guidelines. These financial challenges underscore the complexities faced by the company in recent years.
Despite these hurdles, the future outlook for Salama remains optimistic. The company is strategically positioned to leverage its expertise in the takaful industry while continuing to address its financial challenges head-on. Investors should consider the company's long-term potential, especially as it seeks to stabilize and grow in the coming years. Given the current financial landscape and Salama's proactive measures, a 'hold' position is recommended for investors, allowing for a careful evaluation of future developments.
Source
Summary
The document is prepared according to disclosure requirements for companies with shares listed on the market that have accumulated losses of 20% or more of their paid-up capital, as per the SCA Board of Directors’ Decision No. (32/R.M.) of 2019. The Islamic Arab Insurance Company – SALAMA reported accumulated losses amounting to AED 440,288,300, which is 46.86% of its paid-up capital, as of September 30, 2025. Key factors contributing to these losses include a provision of AED 288,467,043 taken in 2024 against 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 against the UAE Dirham and inflation in Egypt, and unrealized losses on shareholder investments totaling AED 71.2 million in 2023. Additionally, provisions of AED 12.01 million were made for credit losses on other investments and receivables, in line with IFRS 9.
