Arab Insurance Group (Arig), Bahrain-based insurance major, almost matched its previous year’s performance by realizing $20.8 million in profits for the year 2010, (2009: $21.9 million), maintaining the sustained patterns of profitability for the second consecutive year.
“Both, reinsurance and investments, contributed to the positive bottom line with a technical result of $16.2 million (2009: $16.5 million) and investment returns of $34 million (2009: $33.7 million), all before consideration of expenses. The net profit for the fourth quarter of 2010 was $9.2 million (4th Qtr 2009: $4.9 million),” Arig in a statement said.
“Arig’s non-life reinsurance portfolio performed at a 67.8% loss ratio (2009: 67.9%), bucking the trend of the decline in trading terms. However, prevailing soft market conditions meant that the Group had to sacrifice some premium related to under-performing accounts in order to safeguard its profitability,” it added. Correspondingly, the company said, gross written premium reduced by 14.3% to $239.5 million (2009: $279.4 million). Amid volatile financial markets and generally depressed yields on fixed term deposits, the Group achieved a 5.2% return on investments for the reporting period (2009: 5.0%).
Arig’s shareholders’ equity stood at $260.1 million at the end of 2010 (end of 2009: $267.3 million) with a book value per share of $1.31 for the same period (end of 2009: $ 1.27).
“Our primary concern is for our stakeholders. We strongly believe that the ability of a reinsurer to produce profits across market cycles is defined by its ability to contract when conditions start becoming unattractive,” said Yassir Albaharna, Arig’s CEO.
“There is little value in chasing after market share right now. Instead, the Group is concentrating on building new opportunities for future development. During the year we expanded our regional network and established Arig as a corporate member at Lloyd’s.”
Arig’s board of directors has recommended a cash dividend of 7.5% on the company’s paid-up capital, or 7.5 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 to be held on March 27, 2011.