The Islamic Arab Insurance Company, commonly known as SALAMA, has recently unveiled its financial results for the fiscal year ending December 31, 2025, showcasing a remarkable turnaround in profitability and capital strength. The company, which operates under the principles of Islamic Shari'a, reported a net profit of AED 11.1 million, marking a substantial 147% increase on a normalized basis compared to the previous year.

This impressive growth in underlying net profit, excluding a one-time foreign exchange gain of AED 20 million in 2024, underscores SALAMA's strategic focus on sustainable underwriting profitability and long-term value creation. The company attributes this success to disciplined underwriting, tighter risk selection, portfolio optimization, and enhanced claims management.

In addition to its improved earnings, SALAMA has also strengthened its capital and solvency position. The company undertook a capital reduction and initiated the issuance of a Mandatory Convertible Sukuk (MCS) worth up to AED 155 million. This move aims to bolster solvency and support sustainable growth, reflecting SALAMA's commitment to prudent financial management.

The Board-approved transformation plan has played a pivotal role in enhancing governance oversight and risk management across underwriting, reserving, and investment functions. Chairman Essa Ali Bin Salem Alzaabi emphasized that 2025 was a significant milestone in SALAMA's transformation journey, highlighting the company's strengthened financial foundations and capital resilience.

For investors, the question remains whether to buy, sell, or hold SALAMA's shares. Given the company's robust financial performance, enhanced capital position, and strategic focus on sustainable growth, it appears that SALAMA is on a promising trajectory. However, considering the inherent risks in the insurance sector and potential market volatility, a cautious approach is advisable. Thus, a 'hold' recommendation seems prudent, allowing investors to monitor the company's progress and reassess their positions as new developments unfold.