UAE - Profits of UAE-based listed insurance companies jumped 40 per cent to Dh994.5 million in the second quarter of 2018 as against Dh712.5 million for the same quarter last year.
According to Insurance Monitor, the overall contribution to net profit stems largely from an increase in technical profits, which grew from Dh307 million in Q2 2017 to Dh543 million in Q2 2018.
Nisha Braganza, founder and CEO, InsuranceMonitor.ae, said corrective measures on motor pricing that were introduced in 2017 have helped normalise returns.
Commenting on the impact of five per cent value-added tax implemented earlier this year, she said VAT does not technically impact the profitability of insurance companies as they are meant to collect five per cent from customers and liable to pay the same to the government.
"The same applies to VAT incurred on their own purchases which is recoverable. The amounts collectible and payable are netted off as a balance sheet item. That said, there is a one-off exposure of the impact of VAT payable on unexpired policies of underwriting year 2017 that run into 2018 that were not billed to customers in 2017. More will be known at year-end 2018," Braganza added.
According to Insurancemonitor, overall performance of the sector appears strong. At least 12 out of 30 insurers recorded a decline in gross written premium and at least five insurers are seen to operate with net assets under the minimum capital requirement of Dh100 million. During the first half of 2018, a total of Dh655.5 million was paid out as dividend by 20 insurers, representing 48 per cent of 2017 net profit of 30 national insurers, it said.
Out of 30 listed insurance companies, 26 reported profits while three were into the red. One company had not released results yet. Union Insurance recorded the highest growth in net profits of over 3,000 per cent in the last quarter followed by Ascana at 243 per cent, Al Fujairah National Insurance at 234 per cent, Insurance House at 214 per cent and Watania at 190 per cent.
In Q2 2018, gross written premiums grew three per cent to Dh12.55 billion as against Dh12.23 billion in the same quarter last year. Watania registered the highest growth of 42 per cent in GWPs followed by Salama, Al Fujairah National Insurance, Al Khazana National Insurance and Ras Al Khaimah National Insurance.
In 2017, the combined annual profit of insurance companies listed on the UAE financial markets for 2017 surged to Dh1.4 billion from Dh900 million in the previous year, an increase of 55.5 per cent.
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