Saudi Arabia – Capital Increase Doesn’t Stop Losses
Tuesday, 05 19 2015, Category: Insurance and Reinsurance, Country: Saudi Arabia
Salah Al-Jabr, chairman of the Insurance Committee at the Eastern Province Chamber of Commerce and Industry, pointed out that increasing capital through issuing preferred stock to securities holders is not the correct method to earn profits and put an end to accumulated losses that have exceeded 75% of capital in some companies.
He added that many companies are still incurring financial losses as indicated by the clear data in annual and quarterly financial statements issued by the companies showing ongoing losses and no profitability. He also indicated that annual results, rather than quarterly results, are the ones that truly measure a company’s performance and emphasized that many losing companies suffer from an accumulation of losses due to ongoing financial claims especially in motor third party liability policies. Al-Jabr additionally mentioned that to enter the stage of profitability losing companies must undergo internal restructuring and improve their performance in the local market. Doing so will cut costs and increase business, an essential step in the transition from loss to profit.
Source: Okaz Newspaper