Manama: Arab Insurance Group (Arig) today announced the highest ever net profit of US$ 48.2 million in 2005, an 82% increase from US$ 26.5 million in the previous year. The profit for 2005 represents 19.5% return on average shareholders’ equity.
At the Board meeting today, the Directors approved the 2005 financial statements and recommended distribution of dividends to shareholders for 2005. A cash dividend of 5% of paid up capital and bonus share of 1 for every 10 shares held will be proposed for approval of the shareholders at the company’s annual general meeting to be held on 29 March 2006.
In 2005, Arig successfully completed the last of its planned divestments from the controlling positions in direct insurance subsidiaries through the sale of CNIA Assurance, Morocco. Current year’s results included capital gains and operating profits of US$ 28.9 million from this divestment.
Keeping in line with its policy to grow the reinsurance business based on the company’s core competencies, Arig jointly with some leading regional financial institutions launched Takaful Re Limited to offer Shari’a compliant reinsurance services for Islamic insurance companies. Further, in a move to tap the reinsurance business in the significantly growing Far East markets, Arig established a new branch in Singapore. Both Takaful Re and the Arig Singapore Branch have commenced underwriting operations from 2006.
Mr. Khalid Ali Al Bustani, Arig’s Chairman said, “We are indeed happy that our Silver Jubilee year has been capped with an excellent financial performance and significant strides in positioning Arig for the future. We are particularly thankful to our reinsurance clients who have maintained long established business relationships with us. A clear evidence of their support was our ability to record an impressive 32% growth in premiums despite operating in a soft market environment.”
Arig’s gross premiums from the reinsurance business increased to US$ 173.7 million from US$ 131.3 million in 2004. This growth was mainly driven by the treaty business which contributed US$ 145 million, up from US$ 108.1 million in 2004. Premiums from the Asian markets increased substantially by 49% from US$ 34.9 million in 2004 to US$ 52.0 million in 2005 largely based on the strength of Arig’s ‘secure’ range investment grade BBB ratings from Standard & Poor’s.
Mr. Udo Krueger, Chief Executive Officer, Arig, said, “We had a good year on all fronts – whether in terms of underwriting profitability, investment returns or progressing on initiatives for future growth and profitability. The strategic measures that have been resolutely implemented over the last 5 years with the whole hearted support of the Board have enabled us to register these impressive results.”
During 2005, Arig further improved its market share and overall profitability despite an over-proportional increase in the number of large property claims, as a consequence of which the claims loss ratio increased from 64.2% in 2004 to 69.4% in 2005.
Arig’s investment portfolios, which are conservatively managed to protect policyholders’ funds, produced increased investment income of US$ 33.0 million in 2005, up from US$ 20.6 million in 2004.
Mr. Krueger added, “With the sale of our subsidiaries, and the consequent reduction of group-wide assets and liabilities, Arig’s balance sheet is now considerably leaner. However, we now have a much stronger company with total shareholders’ equity increasing to US$ 272.4 million from US$ 223.1 million at the end of 2004 and the all time low of US$ 116.7 million just a couple of years back at the end of 2002.”
With the issue of bonus shares, Arig’s paid up capital will increase to US$ 220 million from US$ 200 million presently. At the end of 2005, the book value of the Arig share was US$ 1.38 and its market value was US$ 1.19 per share.
