UAE: Listed insurers posted beyond expected strong performance in 1H
Source: Middle East Insurance Review | Oct 2017
UAE public listed insurers turned in strong growth in gross premiums and net profit in the first half of 2017, exceeding expectations, said S&P in a report.
The growth is largely attributed to two key regulatory initiatives, “namely, rate increases in motor insurance, which are the result of a new unified motor policy that the UAE Insurance Authority introduced in January 2017, and the final stage in the implementation of compulsory medical insurance in Dubai, which has increased the number of policyholders under this scheme”.
The significant increase in underwriting profitably, particularly in the takaful sector, also had a positive impact on the market’s total net profit. The focus on better net underwriting results comes at a time when investment returns continue to decline, said S&P Credit Analyst Emir Mujkic.
“That said, despite lower investment results, we note that investment returns still play an important part in the overall earnings composition of listed insurers in the UAE.”
While GWP and net income showed strong growth in the first six months of 2017, total growth in shareholders’ equity remained relatively flat. Strong premiums growth, combined with unevenly distributed profits, is increasingly putting pressure on the capital buffers of some weaker capitalised insurers in the market.
“However, apart from some individual exceptions, we expect overall credit conditions in the UAE insurance sector to remain stable over the next 12 months,” said the report.
The net profit of 28 listed insurers surged by 34.2% to AED764 million (US$208 million) during the first half of 2017 against AED569 million during the corresponding period last year. M
AED1 = US$0.27