Islamic Arab Insurance Company (SALAMA), the UAE’s largest and oldest takaful provider, has reported a net profit of AED55m ($15m) for the financial year ended 31 December 2019, compared to the AED2m posted for 2018.
GWP grew by 6.25% to reach AED1,106m in 2019 compared to AED1,041m in 2018.
SALAMA’s focus on improving the quality of risk underwritten while maintaining a delicate balance on top line growth has led to the improvement in underwriting profit, which grew from AED151m in 2018 to AED183m in 2019.
For the first time since its listing on the Dubai Financial Market, the board of SALAMA has recommended a cash dividend of 3 fils per share to its shareholders.
Subsidiaries of Dubai-headquartered SALAMA in Egypt and Algeria also reported stellar growth in underwriting income. SALAMA Egypt’s general and family takaful companies posted an increase of 74% and 52% respectively, while its Algerian subsidiary reported growth of 80% in underwriting income.
In 2019, the shareholders of SALAMA elected a new board that implemented a multifaceted strategy focused on increased profitability, consolidation and improvement of the investment portfolio, and enhanced corporate governance aimed at SALAMA’s long-term and sustainable growth.
As part of this strategy, SALAMA substantially overhauled its investment portfolio in 2019, repositioning its investment portfolio to low volatility and high-quality income-generating assets that generate consistent risk adjusted cash income. The investment income is expected to be an essential component of overall profitability in the coming years. The board has also directed the management to aggressively scrutinise and claw back a legacy portfolio of low-yield investments in mudarabah structures with non-regulated counterparties.
Commenting on the results, SALAMA chairman Jassim Mohammed Al Seddiqi said, “SALAMA’s performance in 2019 is the outcome of the board’s relentless drive to improve the underwriting and balance the investment portfolio across the group. In 2019, we pared down exposure to risky assets and began the process of moving the portfolio to stable and conservative cash income producing assets.
“The current COVID-19 pandemic situation has left us all to make extraordinary decisions amid mounting challenges. Our medical and life underwriting portfolios are substantially de-risked through prudent reinsurance treaties. We remain positive and optimistic about the long-term growth of the takaful sector and continue to assess various organic and inorganic growth opportunities.” M