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Dubai Insurance’s share price remained unchanged during trading on Tuesday, despite the company announcing a 125 percent year-on-year increase in third quarter (Q3) net profit for the year 2018, as the stock continued to see low trading volumes.
Data from the exchange shows that the company has had 8 trades in the last six months with a volume of 243,804, which is very low compared to a blue chip like Emaar Properties that has recorded 39,262 trades with a volume of 759,292,927
Third quarter net profit amounted to 6.3 million UAE dirhams ($1.71) compared to 2.8 million UAE dirhams last year.
“It seems the company is doing better, cost control should help them moving forward,” Issam Kassabieh, senior financial analyst - research department at Menacorp, told Zawya by email.
“Basically, it is a matter of risk management, they need to find the right balance by choosing the right insurance and reinsurance policies.”
Claims incurred in Q3 2018 amounted to 118.9 million UAE dirhams, compared to 98.3 million UAE dirhams of claims incurred in the same period last year.
Although the claims incurred rose in Q3, the company was able to cover most of these claims through reinsurance.
“If we look at their financial statements, it is clear that the claims incurred were higher for Q3 2018, compared to the same period last year, which lowers their net profit, but the company’s strategy to reinsure the claims incurred has helped them offset most of the losses,” Kassabieh added.
Reinsurance shares of claims incurred amounted to 110.3 million UAE dirham in Q3 2018, covering 93 percent of the claims incurred. While, in Q3 2017, the reinsurance shares of claims incurred was 81.3 million UAE dirhams, covering 83 percent of the claims incurred.
For the year, Dubai Insurance’s share price has added 7.46 percent, outperforming Dubai’s stock market index which is now 16.45 percent down since the start of the year.
Dubai’s index closed 0.74 percent higher on Tuesday, Abu Dhabi’s index rose 0.63 percent, Oman’s index edged up 0.14 percent, while Bahrain’s index edged 0.12 percent lower and Kuwait’s stock market was closed.
By 15:16 GMT, Saudi Arabia’s index was trading 0.17 percent higher, while Egypt’s index was up 1.27 percent.
(Reporting by Gerard Aoun; Editing by Shane McGinley)
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