Salama traded premium volume for solvency — 76% to 154% in six months

Salama, founded in 1979 and listed on the Dubai Financial Market, is one of the world's longest-established composite takaful groups, with operations in the UAE, Algeria and Egypt. By the start of 2026 the model of chasing premium volume had run out of road: its solvency ratio ended 2025 at 76%, below the comfort zone regulators and reinsurers expect, and the underwriting engine itself was losing money — a negative AED 1.9m insurance service result in H1 2025 and net profit of just AED 0.4m in Q1 2025.

Group CEO Mohamed Ali Bouabane's program inverted the logic that produced those numbers: sustainable profitability over top-line growth. The group repriced risk, exited underperforming and low-margin lines, and modernized underwriting, letting insurance revenue fall deliberately from AED 256.4m in Q1 2025 to AED 229.5m a year later — accepting a smaller book as the price of an adequate margin.

Capital repair ran in parallel. A capital raise completed during H1 2026 lifted shareholders' equity 40% to AED 505m and pushed the solvency ratio from 76% to 159% at the end of Q1, settling at 154% by 30 June with a surplus of AED 111.6m above regulatory requirements. The raise was, by the company's account, well received — investors were buying into visible underwriting discipline rather than a leaky balance sheet.

The earnings followed the repair. Q1 2026 net profit reached AED 14m against AED 0.4m a year earlier, and H1 2026 profit after tax of AED 28.3m was more than three times H1 2025's AED 8.2m, with the insurance service result swinging AED 30.2m from loss to profit. The UAE business posted its first positive net underwriting result since Q2 2022, while the Algerian and Egyptian subsidiaries contributed throughout — proof the group could shrink weak lines without starving the whole.

Solvency restored from 76% to 154% with an AED 111.6m surplus; H1 2026 profit of AED 28.3m, 3.4 times the prior year, on deliberately smaller premium volume.

A composite takaful insurer with a 76% solvency ratio is below regulatory comfort, which threatens reinsurance capacity and invites supervisory action — the problem could not be left to grow out of.

Low-margin portfolios consumed capital faster than premiums earned it, so cutting revenue was the fastest route back to an adequate ratio, not a side effect of failure.

The capital raise worked because it arrived with visible underwriting discipline; investors will fund a fix, not an open-ended drain.

Geographic breadth — profitable subsidiaries in Algeria and Egypt alongside the weak UAE book — let management cut exposure where returns were worst without hollowing out the group.

An insurer that buys growth with underpriced risk is selling its own solvency; shrinking the top line on purpose — with capital raised behind the fix — is faster than trying to grow out of the hole.

By mid-2026 Salama had delivered its second consecutive profitable quarter — Q2 2026 profit after tax of AED 14.3m against AED 7.9m a year earlier — with the solvency surplus at AED 111.6m and management signalling a shift from repair to what it calls sustainable growth: consistent underwriting performance and a stronger market position. The turnaround is young and the test now is holding underwriting margins through a full market cycle on a deliberately smaller book.