News
Arig Back In Profit After Tough 2008
| February 17, 2010 by Rob Morris
Having posted million dollar losses a year earlier, Arig has bounced back with strong 2009 profits.
Arab Insurance Group (Arig) has completed a major financial turnaround by posting US$21.9 million profits in 2009 following a turbulent performance the previous year.
In 2008, the reinsurance provider announced a $28.6 million loss at the height of the economic downturn. But the company has bounced back in line with a general recovery across global financial markets.
With financial markets picking up, Arig’s investment income at year-end climbed to $33.7 million, a 5% average return on invested assets.
The financial turnaround was aided by a lack of large loss events, which generated a 98.7% combined ratio for the year on Arig’s non-life book of businesses, and a surge to $10.6 million in the company’s underwriting result.
Despite the turnaround, Arig claims further growth was restricted by reduced demand for reinsurance, falling market rates and its selective risk approach. Gross written premium of $279.4 million was close to the previous year’s level of $280.7 million, while net written premium increased slightly to $270.7 million from 269.2 million in 2008.
“While we are obviously pleased with our 2009 performance, I see the industry at crossroads in 2010,” said Yassir Albaharna, Arig’s CEO. “Investment returns are expected to be lower yet insurers continue to engage in price wars. Something will have to give. With the measures we have taken to write the good end of the market, I am confident that our company’s position is protected but appetite for growth may be reduced until conditions improve.”
Arig’s shareholders’ equity increased to US$ 267.3 million in 2009 – up from the previous year’s $239.6 million. Book value also climbed to $1.27 during the same period from $ 1.13 in 2008.
The board has recommended a cash dividend of 6.25% on the company’s paid-up capital, or 6.25 cents per share. The dividend remains subject to clearance by the Central Bank of Bahrain and shareholders’ approval at the company’s annual general meeting on March 28, 2010.
Arig is one of the largest Arab-owned, professional reinsurance providers in the Middle East and North Africa. The company, which is listed on the stock exchanges in Bahrain, Dubai and Kuwait, has various subsidiaries including Takaful Re (Dubai), Gulf Warranties (Bahrain) and ARIMA Insurance Software (Bahrain).
