The first half of 2019 saw favourable results for the UAE insurance sector, with healthy premium income growth of 9% and profit growth of 2%, said Badri Management Consultancy in a report.
Total written premiums by the 30 listed insurance companies in 1H2019 amounted to AED13.7bn ($3.7bn), as compared to AED12.6bn in the corresponding period of 2018, according to Badri’s report titled ‘Performance Analysis of UAE Listed Insurance Companies for the First Half of 2019’.
In 1H2019, the highest premium growth was recorded by ADNIC with a 131% leap, while the biggest decline of 37% was reported by Al Ain Ahlia Insurance. The total premiums written by the top five insurers reached AED8bn, constituting 58% of the total market share in 1H2019.
Based on premium estimations of the past four half-years, the CAGR of the industry from 2016-19 is computed to be 9%, said the actuarial consulting firm. Despite the observable growth, the loss and combined ratios for the industry remained stable at 60% and 90% respectively, owing to improved underwriting strategies and increased monitoring by the Insurance Authority (IA).
Badri’s analysis showed that the highest premium income growth rate in the insurance market over the last four half-years was 15%, achieved in 1H2017, which was due to the IA imposing minimum and maximum tariffs for motor business that were materially higher than the existing rates and new benefits for the industry.
Room for improvement
Total profits of UAE insurers for 1H2019 amounted to AED1.02bn, up 2% over the same period a year ago. The highest profit growth of 125% was achieved by United Fidelity Insurance, which moved its financial position from losses to making profits in 1H2019, while the biggest profit decline of 80% for the period was recorded by ADNIC, said Badri.
In the first six months of this year, insurers produced better performance in terms of profits. Only one company of the 29 under review recorded a loss. In 1H2018, three insurers posted a loss.
Investment income contributed in generating profits for some companies. Insurers that recorded losses from their underwriting business were able to make profits from their investments.
This shows that there is a room for improvement in their underwriting strategies in the market because the primary source for generating profits should be from insurance activities, said Badri said.
The profits of the five most profitable insurers amounted to AED630m in 1H2019, accounting for 62% of total profits in the insurance sector. M
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