Dubai-based Orient Insurance (A/Stable/--) has posted net profits of AED282.3m ($77m) for 1H2020 from AED270.3m for the first six months of 2019, noted S&P Global Ratings.
The increase was 4.4%, despite the economic impact of the COVID-19 pandemic. Profit growth was “mainly thanks to strong operating performance as a result of fewer claims and cost savings from the company's ongoing digital transformation”, says S&P.
The global credit rating agency also says that Orient Insurance reported stronger-than-expected gross written premium (GWP) growth and higher net earnings in the first six months of 2020, despite the pandemic and lower oil prices.
Orient's GWP increased 13.6% to about AED2.56bn in the first half of 2020 from about AED2.25bn during the corresponding half in 2019.
This resulted from the company's expansion across all business lines, despite a lockdown for several weeks during this period.
The use of digital channels enabled Orient to consolidate the operations of seven branches in the UAE. Although, in line with S&P's expectations, Orient reported a modest decline in investment income, mainly due to a decline in interest rates and unrealised losses on equity investments, the company's investments were still profitable.
Shareholders' equity increased to AED3.2bn as of midyear 2020 from AED2.9bn at midyear 2019.
Orient is the largest insurer (measured by GWP) in the UAE and has also consistently been the most profitable and well capitalised, supporting S&P's 'A' ratings on the entity.
As a result of weak economic conditions in the UAE, S&P anticipates that Orient's GWP growth will moderate to about 10% for the full year 2020, while net profit will exceed AED425m, despite ongoing volatility in equity markets.