Saudi Arabia: Health insurer posts 15.5% increase in net profit before zakat of $220m in 2020
Source: Middle East Insurance Review | Apr 2021
Saudi Arabia’s biggest insurer Bupa Arabia has posted a net profit before zakat of SAR823.6m ($220m) for 2020, an increase of 15.5% from 2019.
The company said in a statement that the main reasons for the increase of SAR111m in net profit before zakat for 2020 were due to:
- Increase in underwriting results of SAR225.3m in 2020 compared with 2019, an increase of 19.5%. Net earned premiums increased by SAR1.36bn in 2020, an increase of 14.6%. Net claims incurred increased by only SAR970.6m in 2020 compared with 2019, an increase of 12.5%. This was due to the significant decline in demand for healthcare services during the COVID-19 lockdown period in 2020.
- Decrease in the provision for doubtful receivables of SAR3.1m in 2020 compared to 2019, a decrease of 9.8%, primarily driven by the record collection performance achieved in 2020.
GWP increased by SAR36.5m in 2020 compared with 2019, an increase of 0.4%. Profits after zakat and income tax for 2020 reached SAR696.1m in 2020, an increase of 17.2% over 2019.
Medical claims
Last year, premium deficiency reserves (PDRs) were established to account for the expected surge in claims after the COVID-19 lockdown, as well as to partially reflect the cost impact of the recently announced enforcement of the Cooperative Health Insurance Law, which requires insurance companies to include all accredited government healthcare providers in their approved networks, while also complying with the mandated financial compensation structure.
Bupa Arabia said the enforcement of the requirement is expected to have a material impact on future medical claims considering the mandated prices and protocols regulating the relationship between government health facilities and insurance companies. M