WEBULL

Are Chubb Arabia Cooperative Insurance Company's (TADAWUL:8240) Mixed Financials Driving The Negative Sentiment?

Simply Wall St · 1d ago

It is hard to get excited after looking at Chubb Arabia Cooperative Insurance's (TADAWUL:8240) recent performance, when its stock has declined 26% over the past month. We, however decided to study the company's financials to determine if they have got anything to do with the price decline. Stock prices are usually driven by a company’s financial performance over the long term, and therefore we decided to pay more attention to the company's financial performance. In this article, we decided to focus on Chubb Arabia Cooperative Insurance's ROE.

Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.

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How To Calculate Return On Equity?

The formula for return on equity is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

So, based on the above formula, the ROE for Chubb Arabia Cooperative Insurance is:

2.8% = ر.س13m ÷ ر.س466m (Based on the trailing twelve months to September 2025).

The 'return' refers to a company's earnings over the last year. Another way to think of that is that for every SAR1 worth of equity, the company was able to earn SAR0.03 in profit.

See our latest analysis for Chubb Arabia Cooperative Insurance

What Is The Relationship Between ROE And Earnings Growth?

We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics.

A Side By Side comparison of Chubb Arabia Cooperative Insurance's Earnings Growth And 2.8% ROE

As you can see, Chubb Arabia Cooperative Insurance's ROE looks pretty weak. Even compared to the average industry ROE of 6.0%, the company's ROE is quite dismal. Therefore, it might not be wrong to say that the five year net income decline of 9.0% seen by Chubb Arabia Cooperative Insurance was possibly a result of it having a lower ROE. We reckon that there could also be other factors at play here. For example, the business has allocated capital poorly, or that the company has a very high payout ratio.

However, when we compared Chubb Arabia Cooperative Insurance's growth with the industry we found that while the company's earnings have been shrinking, the industry has seen an earnings growth of 33% in the same period. This is quite worrisome.

past-earnings-growth
SASE:8240 Past Earnings Growth December 16th 2025

Earnings growth is an important metric to consider when valuing a stock. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. If you're wondering about Chubb Arabia Cooperative Insurance's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Is Chubb Arabia Cooperative Insurance Making Efficient Use Of Its Profits?

Because Chubb Arabia Cooperative Insurance doesn't pay any regular dividends, we infer that it is retaining all of its profits, which is rather perplexing when you consider the fact that there is no earnings growth to show for it. It looks like there might be some other reasons to explain the lack in that respect. For example, the business could be in decline.

Summary

Overall, we have mixed feelings about Chubb Arabia Cooperative Insurance. Even though it appears to be retaining most of its profits, given the low ROE, investors may not be benefitting from all that reinvestment after all. The low earnings growth suggests our theory correct. Wrapping up, we would proceed with caution with this company and one way of doing that would be to look at the risk profile of the business. You can see the 2 risks we have identified for Chubb Arabia Cooperative Insurance by visiting our risks dashboard for free on our platform here.