Liva Insurance, a leading company in the Saudi insurance sector, announced a decline in its net profit before zakat for the fiscal year 2025 by 18.7%, reaching SAR 26.6 million, compared to profits of SAR 32.7 million in 2024. This decline comes amid a number of operational challenges faced by the company, which were offset by improvements in some other aspects such as investment management and operating expenses.
Analysis of the reasons for the decline in profits
According to the official statement published by the company on the Saudi Stock Exchange (Tadawul) platform, the decline in profits is mainly due to three key factors:
- Net insurance services revenue declined sharply by 73.02% to SAR 19.5 million. The company explained that the primary reason for this was the increase in reinsurers' share of ceded premiums during the year, which reduced the company's net retained earnings.
- Increase in insurance financing expenses: Net insurance financing expenses increased by 59.90%, reaching SAR 3.2 million in 2025 compared to SAR 2.0 million in the previous year.
- Increase in Zakat provision: The net Zakat provision recorded a significant increase of 470.71% to reach 3.375 million riyals, which put additional pressure on the final net profit.
Positive points and indicators of improvement
Despite the challenges, Liva Insurance managed to offset part of this decline by achieving positive performance in other areas, most notably:
- Investment income growth: Net investment income increased by 11.81%, recording SAR 34.9 million, compared to SAR 31.2 million in 2024, reflecting the efficiency of the company’s investment portfolio management.
- Controlling operating expenses: The company was able to significantly reduce other operating expenses by 63.52%, to only 8.2 million riyals, down from 22.5 million riyals in the previous year, which demonstrates the company’s efforts to improve operational efficiency.
General context of the Saudi insurance sector
This announcement comes at a time when the Saudi Arabian insurance sector is undergoing significant structural transformations, driven by the goals of Vision 2030, which aims to increase the sector's contribution to GDP. The implementation of International Financial Reporting Standard 17 (IFRS 17) has also brought about fundamental changes in how insurance companies present their financial statements, potentially impacting year-on-year performance comparisons. Liva Insurance, formerly known as AXA Cooperative Insurance, operates in a competitive environment that demands high agility and adaptability to regulatory and market changes overseen by the Saudi Central Bank (SAMA).
Board of Directors' Recommendation and Future Direction
In light of these results, the company's board of directors recommended not distributing cash dividends to shareholders for the fiscal year ending December 31, 2025. The company justified this recommendation by stating its desire to support and strengthen the company's financial position, enabling it to meet future challenges and capitalize on available growth opportunities in the market. This recommendation is scheduled to be presented to the upcoming general assembly of shareholders for a vote.
