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Arig Press Release 3rd Quarter 2008 Results

Source: Corporate Communications

Manama: Arig announced a net loss of US$ 10.8 million for the first nine months of the Financial Year (Q3 2007: US$ 10.3 million profit) following the global financial turmoil and the steepest fall in recent capital market history.   As a significant portion of the loss on investments remains unrealized, the Company could have reported a lower loss by reclassifying its investments as permitted under the recent amendments to IFRS rules. However, in order to maintain transparency and consistent accounting policies, Arig chose not to reclassify any of its investments.

 

The Group, whose majority shares are held by Government bodies, is an international reinsurer with investments in international and regional markets. Arig has no exposure to troubled assets such as sub-prime obligations or failed financial institutions. Real estate exposure is minimal and current share of equities in total investments is around 12% in line with Arig’s conservative investment strategy. At the same time, the Group is highly liquid holding 57.8% or US$ 400 million of its investable assets in cash or equivalent instruments, ready to be deployed when markets turn around.

 

Recording a 29% increase in earned premium, reinsurance operations produced a technical profit (premiums less claims less acquisition cost) of US$ 7.2 million (Q3 2007: US$ 4.6 million loss). However, due to negative investment earnings on policyholder’s funds, the overall result was an underwriting loss of US$ 7.7 million (Q3 2007: US$ 3.7 million loss) while the Group’s improving combined ratio stood at 104.1% (Q3 2007: 111.8%).

 

Yassir Albaharna, CEO of Arig comments: “Much of the global reinsurance sector is reporting depressed third quarter results on the back of higher claims incidence and lower investment earnings. The fact that investment income is no longer able to support insufficient insurance terms and instead impacts performance should actually compel ‘back to basics’ approach by insurers. We should expect that more adequate product pricing would lead to better risk returns in the mid-term, similar to what we experienced during the market crunch following the 9/11 events.”

 

Key financial highlights:

 

(US$’000)
 
30 September
Year 2007
2008
2007
Gross Premium Written 239,098 214,978 249,968
Technical Result 7,240 (4,555) (2,999)
Underwriting Result (7,690) (3,676) 270
Total Investment Income (6,481) 34,687 53,693
Total Operating Expenses 25,726 20,556 29,170
Net Profit (10,834) 10,286 23,655
       
Investment Assets 694,735 698,395 711,658
Technical Reserves (net) 550,218 483,979 459,104
Shareholders’ Funds 261,373 284,285 298,438
Total Assets 1,140,160 1,073,332 1,049,808
Book Value per share (US$) 1.24 1.33 1.40

 

 

 

 

 

 

 

About Arig

 

Arig is one of the largest Arab-owned, professional reinsurance providers in the Middle East and North Africa. Arig is listed on the stock exchanges in Bahrain, Dubai and Kuwait and offers a wide range of reinsurance products and services. Arig’s subsidiaries include Takaful Re (Dubai), Gulf Warranties (Bahrain) and ARIMA Insurance Software (Bahrain). Additional information about Arig can be obtained at www.arig.net


© 2022 Arab Insurance Group (B.S.C.) is a reinsurance firm regulated by the Central Bank of Bahrain