SEEF: Despite the challenging market conditions in insurance sector, Bahrain Kuwait Insurance (BKIC) registered an increase of 4% in Gross Premium from BD 38.2 million in 2013 to BD 39.8 million in 2014, according to the CEO of BKIC.
Ebrahim Alrayes the CEO, on the sidelines of the BKIC annual general assembly, told The24X7News Bahrain (www.twentyfoursevennews.com) that the Company in 2014 had reported a record result despite severe competition among companies for business both in Bahrain and Kuwait markets.
“The increase was mainly contributed by FGA class as we could secure few new accounts during 2014. Gross Earnings also increased by 4 % from BD14.2 million in 2013 to BD14.7 million in 2014,” he said.
Earlier, the General Assembly of Bahrain Kuwait Insurance Company approved at their meeting held at BKIC Headquarter in Seef District, Kingdom of Bahrain on Sunday, 8th March 2015 the cash dividend of 35% of the paid up capital, or equal to BD2.5million, to the shareholders.
Alrayes with plenty of experience in the market said the time has come to implement the scientific approach in underwriting business to navigate through the challenging times and adding a value to the shareholders investments.
“At the BKIC, our main thrust of the business to enhance the profitability by utilizing the expertise in best possible manner,” Alrayes said, adding that motor insurance business has become very competitive and the scientific approach while writing such business could only help to evade the impact of the possible losses in motor insurance business.
For insurers, he said, is a very little choice left especially when there are more claims to absorb the losses coming from motor insurance. “The only smart business approach can help companies to survive,” he said. Talking about compulsory health insurance, he said again there would be scope of good business of the rate were good.
Net incurred claims increased by 10% from BD 7.5 million in 2013 to BD 8.3 million in 2014 mainly due to increase in motor claims of Kuwait and medical claims of Bahrain. IBNR provision also was increased by BD 130,000 based on the actuarial report. This resulted in decline in underwriting profit from BD 3.3 million in 2013 to BD 3 million in 2014. Net Profit increased by 14.5% from BD 3.7 million in 2013 to BD 4.2 million in 2014 due to extraordinary gain of BD 1.5 million recorded on sale of an investment property.
Alrayes said that the new website for online selling of personal lines products was launched in 2014. It is worth to mention that the website got Web award for 2014 among Insurance and finance companies.
“This site is considered as a pioneer in the industry, creative, innovative at the same time, simple to use. During 2014, the Company signed an agreement with Gulf Air wherein individual buyers of home travel and motor annual policies will get credit for free mileage under Falcon Frequent Flyer Programme. We developed and launched new motor comprehensive products with different benefits and different options, and a product to clients of limited income called Motor Economy Comprehensive product. We have also established a help desk to answer clients’ questions on insurance related matters over phone,” he added.
And the outlook for the year 2015, Alrayes said that falling oil prices would throw various challenges to insurance companies given the fact that oil sector is the major motivator of the economy. “We expect the Governments may exercise more pressure on controlling of expenses and revenue spending. They may reduce the spending budget of service industries and postpone some projects. This will increase competition and increase in prices. We hope that the private sector will play a bigger role in activating the economy.”
Property insurance portfolio, which constitutes about 18% of the total volume, operates on very thin margins. Low retention capacity of the market implies outflow of profitable premium at nominal commission terms which barely allow insurers to meet their costs of operation. However, your company continued its strategy in concentrating on profitable lines of business and has been able to achieve a 4% growth in premium income despite severe competition.
Murad also mentioned in his report about the economic and political situation in Bahrain and said in the past year, the company has achieved a few milestones that worth to mention. The Board has deliberated upon and approved Financial and Administrative Authority matrix which covers all aspects of the company’s s operations as well as approved the Whistle blower policy. The Board has also discussed and approved matters related to corporate governance as required by the regulators in Bahrain, and these included Conflict of Interest and performance evaluation of the members of the Board and its committees. The Board has also approved amendments to the procedural manual for prevention of money laundering as required by the CBB.
“With regard to the credit rating, he stated that the international rating agency A.M. Best has affirmed the credit rating of the company A- with stable outlook after a review of the company’s operations during the 3rd quarter of the year. This rating reflects the company’s ability to meet all its financial obligations comfortably.”