Arig, plans to have a physical presence in the DIFC this year as it looks to reinforce its profitable facultative book of business, it said in its 2015 annual report.
This is one of several moves Arig outlined in the report to deal with a premium outlook for the Middle East insurance industry that in the short term is forecasted at “modest growth or stagnation”.
Among others, Arig has increased its appetite for individually underwritten accounts, with automatic treaty facilities with clients having shown diminishing returns.
At the same time, the company has renewed its interest in bringing selected Lloyd’s products into its home markets and beyond. Through coverholder agreements with individual Lloyd’s syndicates in the London market, Arig intends to deliver leading market know-how and Lloyd’s ‘A’- rated security to its customers’ doorstep. Moreover, the reinsurer has signed new agreements that will increase its involvement in the Lloyd’s market while adding global reach, new products and further diversification to its portfolio.
Arig also views personal lines as a major area of future development. The report said: “We believe that the private sector will need to become increasingly engaged when governments find they can no longer afford the giveaways their people have been enjoying. Medical, old age, disability, education and changing consumer behaviour are just a few of the future areas where insurers need to start building in-house expertise. Arig is ready to assist them with its formidable team of underwriters that is already working on customised solutions.”
Creating efficiencies
In addition, Arig is addressing Group efficiencies by withdrawing from activities that are no longer adding value to shareholders. In 2015, it took stock of its overseas network, leading to a number of actions. Takaful Re, in which Arig has a 54% shareholding, has stopped accepting new business. Arig is also closing its branches in Singapore and Labuan, citing low returns, increasing protectionism in the region and the high operational expenses.
For 2015, Arig reported a net loss of US$4.4 million, compared to a profit of $15.6 million in 2014 due to lower investment returns. The Group generated a profit of $0.8 million from its underwriting activities (2014: $6.0 million) as a result of treaty losses from the two large earthquakes in Nepal, mid-size claims from the Far East and Turkey, and the blaze at The Address Hotel in Dubai last New Year’s Eve.