National Takaful Company (Watania) has approved a dividend payment of 5% to shareholders for the financial year ended 31 December 2018. This is the first time the company has declared dividends since its inception in 2011.
The company posted net profit of AED12.3m ($3.4m) for 2018, 62% higher than the AED7.6m chalked up in 2017. The profit increase was due to strong operating results and expense management.
In 2018, gross written contributions increased by 11% to AED300.3m while underwriting gains surged by 38% to AED45.2m. Investment profits were flat at AED4.7m in 2018, similar to 2017.
Dr Ali Saeed bin Harmal Al Dhaheri, Watania chairman, said in a statement, “The growth in net profit in FY2018 was due to improvement in our takaful operations with contributions from motor and medical leading the way. Our investment income remained flat as the equity market was depressed and real estate income was also under pressure. It is important to mention that like the whole of UAE insurance market we were also hit by the transition VAT which is the tax amount that company had to bear in respect of takaful policies issued in 2017 that expired in 2018. This amount could not be recovered from retail customers.”
Dr Al Dhaheri said, “Our progress so far has been in line with the three-year strategy that was adopted in 2016. We are now moving into the next phase of our business that will focus on maintaining profitability and stable return for the shareholders. We are demonstrating that by declaring dividends for the first time since the company’s inception. Our plans are now to build on this success and ensure that we achieve our vision and mission of being the leading takaful company where leadership is defined in terms of returns for all the stakeholders.”
The business strategy is built on three pillars comprising smart segmentation of customers and competitive pricing; customer service that is consistent and continues to exceed expectations; and skilled and well-trained employees who are committed and motivated.
Commenting on future plans, Dr Al Dhaheri said, “The company has identified two core product lines to drive its business strategy. These products are medical and motor. The company will continue to develop and increase its penetration through better service and competitive pricing in the right segment.”
He said that the company’s investment strategy focuses on real estate, subject to the investment limits set by the Insurance Authority . “We are always looking for real estate investment opportunities that provide good and stable yield.”
In his comments on the performance of the insurance sector in the country, Dr Al Dhaheri said: “The insurance market in UAE is going through challenging times. The growth in 2018 was less than 1% compared to double digit growth rates in the past. While the market continues to be profitable, the pressure on pricing is becoming quite obvious as 62 companies in UAE try to maintain their market share. This will invariably lead to strains in profitability and we expect this to become evident sooner than later.”