Islamic Arab Insurance Company, listed as "SALAMA" on the Dubai bourse, has announced that its net profit for the first three quarters of this year surged to AED137.06m ($37.32m) from AED34.99m for the corresponding period last year. This represented an increase of 392% year-on-year.
The company's net profits for the first nine months of 2020 included a one-off profit of AED63.37m from the sale of some of SALAMA Cooperative Insurance (Saudi Arabia) shares, the company says in a statement. The sale of shares in SALAMA KSA, reported in the third quarter of this year, is in line with SALAMA’s intention to focus on the local market, where it sees the most growth potential, and also to strengthen its financial position in order to be able to pay dividends to its shareholders.
The underlying net profit stood at AED73.69m in the first three quarters of the year, more than doubling year-on-year (YTD 2019: AED34.99m). SALAMA attributes this to strong performances in the UAE and Egypt despite the ongoing challenges presented by the global COVID-19 pandemic. SALAMA has also benefited from the prudent investment strategy adopted by the board of directors that has shielded SALAMA from equity market volatility in the period.
The company was also able to reduce its accumulated losses significantly to AED284.82m (AED 376.82m at 31 December 2019) owing to the strong performance.
The company remains committed to delivering returns to its shareholders via dividend distributions. SALAMA recently announced an interim cash dividend of AED0.03 per share for 2020, its first interim dividend since IPO, which was approved at its general assembly meeting held in October 2020. In addition, in August 2020, SALAMA announced a payment of surplus cash returns of AED11.5m to eligible group credit life policyholders, making it one of few takaful providers in the region to do so.
Overall, SALAMA reported growth of 7.5% in gross written contribution, from AED883m in the first nine months of 2019 to AED949m for the same period in 2020. All lines of business and subsidiaries maintained their positive trajectory in line with expectations, with the exception of SALAMA Algeria which reported a decrease in gross premium income in the first nine months of 2020. It is expected that performance of Algeria will improve in coming periods.
SALAMA's underwriting income grew from AED108.21m in the first nine months of 2019 to AED121.58m in the corresponding three quarters of 2020, an increase of 12.35% year-on-year.
Commenting on the results, Mustafa G Kheriba, SALAMA’s group managing director, said: “During the first nine months of 2020, SALAMA maintained its positive growth despite the challenges arising from the global COVID-19 pandemic.”
SALAMA is the largest Shariah-compliant takaful operator in the UAE with ‘AAA’ level capital adequacy as per S&P.