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114955
Sun, 04/04/2010 - 14:48
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https://oananews.org//node/114955
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UAE insurance firms' gross premiums rise 5% in 2009
Abu Dhabi, April 4, 2010 (WAM)- The UAE insurance companies' gross premiums reached more than Dh9.9 billion in 2009 against Dh9.4bn in the previous year, an increase of five per cent, according to a study by Standard and Poor's ratings agency according to report in "Emirates Business."
"This overall growth reflects a mix of trends, with some companies declining and others growing strongly," said Kevin Willis, Director, Standard & Poor's.
Abu Dhabi-based companies collected 38 per cent of the total premiums, Dubai 47 per cent and other emirates 15 per cent in 2009. The international ratings agency said the proportions are similar to 2008.
Willis said premium growth exceeded the inflation rate, reflecting the growing penetration of insurance into the UAE society. It also reflects the expansion of compulsory health, particularly in Abu Dhabi, and growing interest in life insurance.
"It appears that engineering and construction premiums declined in response to both project completion and abandonment, and marine cargo risk covers have declined as shipments reduced because of the global economy contracting," said Willis.
Meanwhile, both the medical and life insurance rose strongly. After all expenses, the conventional insurance firms underwriting profits rose to Dh960m, up by eight per cent from Dh890m in 2008. They make up 10 per cent of the gross premiums.
Technical profitability of Dubai companies was the strongest at 12 per cent of gross premium written (GPW) compared to 11 per cent in 2008. Abu Dhabi companies' underwriting profits were markedly smaller at seven per cent of GPW in 2009 against six per cent in the previous year.
Weak investments have caused overall net profit to fall sharply in 2009 with declared profits overall of Dh870m, down 25 per cent on 2008. "However, there may be some distortions in this comparison caused by differing accounting treatments for recognition of unrealised gains and losses," added Willis.
Excluding reinsurer contract assets, total insurance companies assets rose to Dh19bn, up by five per cent compared to 2008. Dubai based companies held 41 per cent of this total, Abu Dhabi 42 per cent and other emirates 17 per cent – which was similar to 2008 splits.
Conventional UAE insurers' total shareholder funds rose to Dh11.4bn from Dh10.6bn in 2008, up by seven per cent. Also, the proportion of each emirate is not farfetched from the 2008 rank – Abu Dhabi at 49 per cent, Dubai 35 per cent and other emirates at 16 per cent. S&P's Willis said: "Taking into account the caveat that the numbers have not been examined in detail by S&P, particularly for treatment of asset gains and losses, it appears that the Dubai-based insurers have stronger returns on equity than the other sectors."
Also, based on year-end figures only, Dubai rose from 13.3 per cent in 2008 to 14 per cent in 2009, Abu Dhabi declined from 11.3 per cent to 4.4 per cent, and other emirates from 4.4 per cent to 3.4 per cent. And if all grouped together, UAE totalled 10.9 per cent down to 7.6 per cent in 2009.
The report does not include Takaful firms.
"There is insufficient detail yet from the expanding UAE Takaful sector, but on the basis of what has been published, the growth in contributions [gross premiums] has been significantly greater than for the conventional sector,'' he said.
"This overall growth reflects a mix of trends, with some companies declining and others growing strongly," said Kevin Willis, Director, Standard & Poor's.
Abu Dhabi-based companies collected 38 per cent of the total premiums, Dubai 47 per cent and other emirates 15 per cent in 2009. The international ratings agency said the proportions are similar to 2008.
Willis said premium growth exceeded the inflation rate, reflecting the growing penetration of insurance into the UAE society. It also reflects the expansion of compulsory health, particularly in Abu Dhabi, and growing interest in life insurance.
"It appears that engineering and construction premiums declined in response to both project completion and abandonment, and marine cargo risk covers have declined as shipments reduced because of the global economy contracting," said Willis.
Meanwhile, both the medical and life insurance rose strongly. After all expenses, the conventional insurance firms underwriting profits rose to Dh960m, up by eight per cent from Dh890m in 2008. They make up 10 per cent of the gross premiums.
Technical profitability of Dubai companies was the strongest at 12 per cent of gross premium written (GPW) compared to 11 per cent in 2008. Abu Dhabi companies' underwriting profits were markedly smaller at seven per cent of GPW in 2009 against six per cent in the previous year.
Weak investments have caused overall net profit to fall sharply in 2009 with declared profits overall of Dh870m, down 25 per cent on 2008. "However, there may be some distortions in this comparison caused by differing accounting treatments for recognition of unrealised gains and losses," added Willis.
Excluding reinsurer contract assets, total insurance companies assets rose to Dh19bn, up by five per cent compared to 2008. Dubai based companies held 41 per cent of this total, Abu Dhabi 42 per cent and other emirates 17 per cent – which was similar to 2008 splits.
Conventional UAE insurers' total shareholder funds rose to Dh11.4bn from Dh10.6bn in 2008, up by seven per cent. Also, the proportion of each emirate is not farfetched from the 2008 rank – Abu Dhabi at 49 per cent, Dubai 35 per cent and other emirates at 16 per cent. S&P's Willis said: "Taking into account the caveat that the numbers have not been examined in detail by S&P, particularly for treatment of asset gains and losses, it appears that the Dubai-based insurers have stronger returns on equity than the other sectors."
Also, based on year-end figures only, Dubai rose from 13.3 per cent in 2008 to 14 per cent in 2009, Abu Dhabi declined from 11.3 per cent to 4.4 per cent, and other emirates from 4.4 per cent to 3.4 per cent. And if all grouped together, UAE totalled 10.9 per cent down to 7.6 per cent in 2009.
The report does not include Takaful firms.
"There is insufficient detail yet from the expanding UAE Takaful sector, but on the basis of what has been published, the growth in contributions [gross premiums] has been significantly greater than for the conventional sector,'' he said.
