UAE: Industry sees 2019 profits rise for third consecutive year
Source: Middle East Insurance Review | Apr 2020
The UAE insurance market maintained its impressive momentum in 2019 to post a third consecutive year of profit growth, AM Best reported.
Preliminary disclosures of the national insurers listed on the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM) showed improvements in overall performance, combined with good premium growth, said the rating agency.
UAE-listed insurers’ shareholders’ equity reached AED17.5bn ($4.8bn) in 2019, up from AED16.5bn the previous year, benefiting from profit generation, according to a recent AM Best commentary titled, ‘Profits continue to rise for national insurers in the UAE’. Overall, companies in the UAE are well-capitalised and have the capacity to accommodate additional underwriting risk.
Despite GWP growth of 8.3% in 2019, there was a small decline in aggregate underwriting profits (ie, premiums less claims) for UAE-listed insurers of 1.1% to AED1.7bn.
“Underwriting returns benefited in 2017 and 2018 from improvements in pricing and underwriting discipline as a result of regulatory changes in the key business lines of motor and medical insurance. However, the decline in underwriting profits in 2019 suggests pricing pressure and raises concerns regarding medium-term rate adequacy on these lines,” said Mr Salman Siddiqui, director, analytics, AM Best.
Although underwriting returns declined, net profit for listed insurers showed an exceptionally strong increase of 21.2% to AED1.6bn in 2019, implying that companies benefited from strong investment returns. Overall, the market generated a return on equity of 9.5%, above the previous year’s return of 8.0%. M
AED1 = $0.27