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|17 February, 2019

Salama's stock falls sharply as insurer announces drop in earnings

Salama's shares were one of the biggest losers on Dubai's index on Sunday, dropping 6.36 percent in relatively high volumes

Investors watch a monitor at Dubai Financial Market April 27, 2014. Image for illustrative purposes.

Investors watch a monitor at Dubai Financial Market April 27, 2014. Image for illustrative purposes.

REUTERS/Mounir Saidi

Shares in Islamic Arab Insurance Company (Salama) fell sharply on Sunday, as the company recorded a drop in fourth quarter (Q4) 2018 earnings.

The company’s Q4 2018 net loss amounted to 31.36 million UAE dirhams ($8.54 million), compared to a Q4 2017 net profit of 25.14 million UAE dirhams.

Net profit for the full year 2018 dropped by 98.3 percent to 619,000 UAE dirhams in 2018, down from 37.5 million UAE dirhams in 2017.

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The company’s revenues for 2018 amounted to 1.06 billion UAE dirhams, compared to 808.7 million UAE dirhams in 2017.

 “There is a significant drop in earnings which is the obvious reason behind the decline in the stock's (Salama) price,” Issam Kassabieh, senior financial analyst at Menacorp Financial Services, told Zawya by email.

Salama’s shares dropped 6.36 percent on Sunday, as the company’s stock was the fifth-most actively traded stock by volume on the exchange. Dubai’s index closed the session 0.64 percent higher. The company’s shares have gained 0.23 percent so far in 2019, despite today’s drop.

Kassabieh added that the decline in earnings would be difficult to attribute to “any specific items”, since the company has only disclosed preliminary results.

“We will be keeping an eye out on money lost on reinsurance policies and growth in claims,” Menacorp Financial Services’ Kassabieh ended.

In December 2018, investment fund Goldilocks Investment Company, an indirect subsidiary of Abu Dhabi Financial Group (ADFG), announced that it has increased its stake in Salama to 14.05 percent, from 9.92 percent previously, triggering a rally in the company’s stock. (Read more here).

The investment fund, Goldilocks Investment Company, was launched in 2015 with a mandate to invest in listed equities.

Elsewhere in the region, Abu Dhabi’s index rose 0.65 percent on Sunday, Saudi Arabia’s index edged 0.4 percent lower, Qatar’s index added 0.69 percent, Kuwait’s premier market index edged 0.13 percent higher, while Oman’s index fell 0.79 percent and Bahrain’s index gained 0.64 percent.

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(Gerard.aoun@refinitiv.com)

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