listed insurance companies performance analysis of uae€¦ · out of 30 insurance companies, 9...

PERFORMANCE ANALYSIS OF UAELISTED INSURANCE COMPANIESFOR NINE MONTHS ENDEDSEPTEMBER 30, 2019

NOVEMBER 18, 2019

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CONTENTS

B A D R I M A N A G E M E N T C O N S U L T A N C YW W W . B A D R I C O N S U L T A N C Y . C O M

050607

0910

Look at The Previous Quarter

Industry at a Glance

Gross Written Premium

Net Earned Premium

Premiums & Profit Analysis

12151617182021242526

Profit (Before Tax) - Overview

Profit Before & After Investment Income - Overview

Premium Benchmarked on the Basis of Profitability

Net Technical Provisions

Net Reserves as Percentage of Net Written Premium

Loss Ratio and Combined Ratio Overview

Expense Ratio

Return on Equity

Cash to Invested Asset Ratio

Insurance Receivables

Conclusion 27

About Our Team 29

11Retention Ratio

08Conventional Vs Takaful

Summary 28

www.b a dr i co nsu lt a nc y. co m

5

Look at the Previous Quarter

The total written premium of the Industry for the half-year ended 2019 was estimated to be AED 13.7

Billion which shows a growth of 9% from 2018-H1.

Based on the premium estimations of the past four half-years, CAGR of the Industry from 2016-2019 is

computed to be 9%.

The Insurance Industry has exhibited a slightly increasing trend in Loss and Combined ratios in the

first half of 2019, when compared with the corresponding period of 2018. The Loss and Combined

Ratios for the market during 2019-Q2 stood at 60% and 90% respectively.

The Insurance industry represents a total of 30 listed Companies for this report analysis.

13.7B

Billio

n

9% CAG

R

AED

CAGR


6

Industry at a Glance

The total written premium of the Industry for the 2019-Q3 was estimated to be AED 18.8 billion which

shows a growth of 10% from 2018-Q3.

Based on the premium estimations of the past five years, CAGR of the Industry from 2015-2019 is

computed to be 8%.

The Insurance Industry has exhibited a slightly increasing trend in Loss and Combined ratios in the

nine months of 2019, when compared with the corresponding period of 2018. The Loss and Combined

Ratios for the market during 2019-Q3 stood at 61% and 92% respectively.

The analysis carried is for 30 listed Companies of the Industry in this report. AKIC is excluded from

certain KPIs where it was acting as an outlier.

0%

20%

40%

60%

80%

100%

120%

-

2

4

6

8

10

12

14

16

18

20

2015-Q3 2016-Q3 2017-Q3 2018-Q3 2019-Q3

Loss

& C

om

bin

d r

atio

AED

Bill

ion

s

GWP Loss Ratio Combined Ratio


7

Total Gross premiums written by the insurance

companies in 2019-Q3 stood at AED 18.8 billion an

increase of 10% from AED 17.1 billion in 2018-Q3.

The written premium of top 5 companies amounted to

AED 10.6 billion which makes up 57% of the market

share for 2019-Q3.

ADNIC, ORIENT and OIC have maintained their position

in the top ranks from half-year ended 2019 and year-

ended 2018.

The highest growth for the period 2019-Q3 was shown by ABNIC with 102% growth from the corresponding period

of 2018. AKIC experienced the biggest decline in the written premiums from a business of AED 39 million in 2018-

Q3 to AED 96 thousand. Excluding this outlier, the biggest decline is experienced by ASCANA, of 17%.

Overall, the listed companies have shown a sizable growth of 10% in written premiums in 2019-Q3; of the 30

companies considered, 18 companies displayed an increase in premiums over previous period, while 12 companies

saw premiums decline.



Retention RatioGross Written Premium


Retention Ratio

Profit before and after Investment Income - OverviewRetention RatioGross Written Premium


Retention RatioGross Written Premium


Retention Ratio

Profit before and after Investment Income - OverviewRetention Ratio

Profit before and after Investment Income - Overview

Profit before and after Investment Income - OverviewRetention Ratio

Profit before and after Investment Income - OverviewRetention RatioGross Written Premium

2% 34%-4%

13%-27%

-500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

ORIENT ADNIC OIC EIC AAAICA

ED M

illio

ns

TOP 5

GWP 2019-Q3 GWP 2018-Q3

14%102%

92% 0%

5% 34%-5%

30%

11% 4% 15% 6% -4% -12% -3% 63% 4% 19% 0% -9% 67%-17%

18% -15%

0

100

200

300

400

500

600

700

800

900

1,000

SALA

MA

AB

NIC

DIN

UN

ION

TAK

AFU

L-EM

RA

KN

IC

NG

I

TKFL

ASN

IC

DN

IR

DA

RTA

KA

FUL

WA

TAN

IA

DH

AFR

A

MET

HA

Q

ALL

IAN

CE

OU

TFL

AFN

IC IH

AM

AN

AW

NIC

UFI

ASC

AN

A

GC

IC

SIC

O

AED

Mill

ion

s

Others

GWP 2019-Q3 GWP 2018-Q3


8

The 30 listed companies of insurance

market of UAE have witnessed a

significant growth of 10% compared from

2018-Q3.

The highest growth over the last five

periods was witnessed in 2017-Q3 of 15%

which was due to IA imposed minimum

and maximum tariffs for Motor LOB

which were materially higher than the

existing rates and new benefits for the

Industry.

Out of 30 Insurance Companies, 9

operate as Takaful insurers in the UAE

Market.

The proportion of business written by

Takaful companies in nine months of 2019

have remained similar to that of

corresponding period of 2018.

Although the overall profits before tax

have witnessed a decline, the listed takaful

insurers saw a decline of 26% from 2018-Q3

and the conventional companies exhibited

no significant changes in profits for the

period.

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

5

10

15

20

2015-Q3 2016-Q3 2017-Q3 2018-Q3 2019-Q3

AED

Bill

ion

s

GROSS WRITTEN PREMIUM GROWTH TREND

GWP Growth %

16 14

33

0

5

10

15

20

GWP 2019-Q3 GWP 2018-Q3

AED

Bill

ion

s TAKAFUL & CONVENTIONAL BUSINESS DISTRIBUTUON

Conventional Takaful

Conventional Vs Takaful

11% 10%

-26%

0%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Takaful Conventional

BUSINESS GROWTH FOR CONVENTIONAL & TAKAFUL INSURERS

Premium Growth Profit Growth


9

Net Earned Premiums

4%

-11%

2%

22%

16%

0

200

400

600

800

1,000

1,200

1,400

OIC ADNIC ORIENT SALAMA EIC

AED

Mill

ion

s

TOP 5

NEP 2019-Q3 NEP 2018-Q3

Total net earned premiums written by the Listed

Insurance Companies in 2019-Q3 stood at AED 7.28

billion with a decrease of 0.8% from AED 7.34 billion

from the corresponding period of 2018.

The earned premium of top 5 companies was AED 4.1

billion which makes up 56% of the market share for

2019-Q3.

ADNIC, ORIENT, EIC and OIC have maintained their

position in the top ranks in net earned premiums as

well.

The highest growth of the 2019-Q3 was shown by OUTFL with a growth of 116% from the corresponding period of

2018. While the biggest decline of 83% was exhibited by AKIC.

Overall, the market has shown a decline of 0.8% in earned premiums for the nine months of 2019. When compared

with corresponding period of 2018, 17 companies displayed an increase in net earned premiums over previous

period, while 13 companies saw net earned premiums decline.

-19% 51%

14%

-34%

2%13%

5% 23%-13% -3% 21%

-16% -52% 2% 2% 1%-2%

-26%

-10%90% -19%116%

1% -4%

0

50

100

150

200

250

300

350

400

UN

ION

TAK

AFU

L-EM

RA

KN

IC

AA

AIC

NG

I

ASN

IC

AFN

IC

TKFL

AB

NIC

WA

TAN

IA

AW

NIC

DA

RTA

KA

FUL

MET

HA

Q IH

DIN

ALL

IAN

CE

DN

IR

ASC

AN

A

DH

AFR

A

UFI

AM

AN

OU

TFL

GC

IC

SIC

O

AED

Mill

ion

s

Others

NEP 2019-Q3 NEP 2018-Q3


10

Premiums & Profit analysis

The graph represents the summary of premium and profitability growth of the Companies for the nine months

ended of 2019. Companies exhibiting profit and/or premium growth rate higher than 50% are not displayed in the

graph above to avoid distortion in presentation.

UFI, OUTFL and DIN exhibited Gross Premium and Profit growth higher than 50% when compared with last year.

ORIENT

ADNIC

OIC

EIC

AAAIC

SALAMA

UNION

RAKNIC

NGI

TKFL

ASNIC

DNIR

DARTAKAFUL

WATANIA

DHAFRA

METHAQ

ALLIANCE

AFNIC

IH

AMAN

AWNIC

ASCANA

GCIC

SICO

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%

Pro

fit

Gro

wth

Premium Growth


11

The retention ratios have been calculated as a ratio of net written premiums to gross written premium








The weighted average retention ratio for the 30 listed companies stood at 42% (2018-Q3: 45% and 2017-Q3: 45%).

The highest retention for the 2019-Q3 was at 79% reflected by AFNIC while the lowest of 15% is exhibited by DIN

after excluding AKIC, which was acting as an outlier with retention ratio of 1,781%.

Although there may be exceptions, retention ratios are generally reflective of lines of business being

underwritten; Motor and Medical generally tend to have high retention ratios while commercial lines such as

Aviation, Engineering and Fire tend to have lower retention. Also, since this analysis does not segregate Life

and Non-Life business. The Companies writing higher volumes of life especially IL and PA would also tend to

show higher retention levels.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

AFN

IC

ASC

AN

A

GC

IC

SALA

MA

TAK

AFU

L-EM

ASN

IC IH

AW

NIC

WA

TAN

IA

SIC

O

DA

RTA

KA

FUL

RA

KN

IC EIC

TKFL

NG

I

ALL

IAN

CE

UN

ION

OIC

MET

HA

Q

UFI

AM

AN

DN

IR

OR

IEN

T

AD

NIC

DH

AFR

A

OU

TFL

AA

AIC

AB

NIC

DIN

RETENTION RATIO

Retention Ratio 2019-Q3 Weighted Average Retention Ratio

Retention Ratio


12

The profit growths have declined over the

period. In 2018-Q3, the profit for the listed

companies was at AED 1.42 billion. Whereas,

the current quarter resulted in profits of AED

1.37 billion, a 3% decline from corresponding

period of 2018.

Orient has booked the highest profits

consecutively. Profit for 2019-Q3 by ORIENT

amounted AED 353 Million which depicts a

growth of 1%.

ORIENT, ADNIC, OIC and EIC have

maintained their ranks in top 5 when

compared from the corresponding period of

2018.

The profits for the Top 5 companies

amounted to AED 859 Million which is an

increase of 6% from 2018-Q3, and the profit

share of top 5 companies represents 63% of

the total profit of the listed companies in

UAE.

During the nine months of 2019, TAKAFUL-

EM experienced the highest net losses of

AED 17.6 million from making profits in the

corresponding period of 2018. Whereas,

UFI saw a growth of 198% in profits and

moved its books from loss making to

profitable.


Profit (Before Tax) - OverviewProfit (Before Tax) - Overview


Profit (Before Tax) - OverviewProfit (Before Tax) - OverviewProfit (Before Tax) - Overview


1%

-11%

60%

12%4%

0

50

100

150

200

250

300

350

400

ORIENT ADNIC OIC EIC DHAFRA

AED

Mill

ion

sTOP 5 COMPANIES

Profit 2019-Q3 Profit 2018-Q3

-294%

76%45%

-94% 198%

-20

-15

-10

-5

0

5

10

15

TAK

AFU

L-EM

OU

TFL

GC

IC

RA

KN

IC

UFI

AED

Mill

ion

s

BOTTOM 5


-10%

40%

90%

140%

190%

240%

2015-Q3 2016-Q3 2017-Q3 2018-Q3 2019-Q3

0

200

400

600

800

1,000

1,200

1,400

1,600

AED

Mill

ion

s

PROFIT GROWTH TREND

Profit Growth


13

The total profit for 2019-Q3 amounted to AED 1.37 Billion compared to AED 1.42 Billion recorded

for 2018-Q3 which shows decline of 3%.

The highest profit growth of 198% is observed by UFI, which moved their financial position

from losses in 2018-Q3 to making profits in 2019-Q3. The biggest decline of 294% for the period

was recorded by TAKAFUL-EM, it recorded losses in 2019-Q3 from making profit when

compared with corresponding period of 2018.






Loss Ratio and Combined RatioProfit (Before Tax) - OverviewProfit (Before Tax) - Overview



11% 62%

0% -18% -2%-7% -56%

-14% -21%

79% -26%

-28% -32%-20% 28% 10% 10%

-62% 139% -64%

-20

-10

0

10

20

30

40

50

60

70

80

90

TKFL

DIN

DN

IR

SALA

MA

AA

AIC

ALL

IAN

CE

AW

NIC

AB

NIC

NG

I

UN

ION

AFN

IC

ASN

IC

ASC

AN

A

SIC

O IH

WA

TAN

IA

AM

AN

MET

HA

Q

AK

IC

DA

RTA

KA

FUL

AED

Mill

ion

s

OTHERS



14

Investment Income has contributed in generating profits for some companies. Insurance companies that

recorded losses from their underwriting business were able to make profits from their investments.

This shows that there is a room for improvement in their underwriting strategies in the market because the

primary source for generating profits should be from insurance activities for insurance companies.

ment Income has contributed in generating profits for some companies. Insurance companies that recorded

losses from their underwriting business were able to make profits from their investments.



Net Technical ProvisionsInvestment Income has contributed in generating profits for some companies. Insurance

companies that recorded losses from their underwriting business were able to make profits from their

investments.



Investment Income has contributed in generating profits for some companies. Insurance companies that


Loss Ratio and Combined RatioProfit (Before Tax) - Overview

Loss Ratio and Combined Ratio

Loss and Expense Ratio OverviewLoss Ratio and Combined RatioProfit (Before Tax) - Overview

Loss Ratio and Combined RatioProfit (Before Tax) - Overview

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

OR

IEN

T

AD

NIC

OIC

SALA

MA

EIC

DH

AFR

A

DIN

TKFL

AW

NIC

ASN

IC

AA

AIC

DN

IR

AB

NIC

AFN

IC

UN

ION

WA

TAN

IA IH

NG

I

MET

HA

Q

ASC

AN

A

SIC

O

AM

AN

DA

RTA

KA

FUL

ALL

IAN

CE

UFI

GC

IC

RA

KN

IC

OU

TFL

AK

IC

TAK

AFU

L-EM

PROFIT COMPOSITION - UNDERWRITTING & INVESTMENT INCOME

Profit Before Investement 2019-Q3 Investement Income 2019-Q3


15

-50

0

50

100

150

200

250

300

350

400

ORIENT ADNIC OIC SALAMA EIC

AED

Mill

ion

s TOP 5 COMPANIES


-10

0

10

20

30

40

50

60

70

DH

AFR

A

DIN

TKFL

AW

NIC

ASN

IC

AA

AIC

DN

IR

AB

NIC

AFN

IC

UN

ION

WA

TAN

IA IH

NG

I

MET

HA

Q

ASC

AN

A

SIC

O

AM

AN

DA

RTA

KA

FUL

ALL

IAN

CE

UFI

AED

Mill

ion

s REMAINING COMPANIES


-15

-10

-5

0

5

10

15

20

UFI

GC

IC

RA

KN

IC

OU

TFL

AK

IC

AED

Mill

ion

s

BOTTOM 5 COMPANIES


Profit Before & After Investment Income - Overview

Profit (Before Tax) - OverviewProfit (Before Tax) - OverviewProfit (Before Tax) - Overview

Profit (Before Tax) - OverviewProfit (Before Tax) - OverviewPremium Benchmarked on the Basis of Profitability

Profit (Before Tax) - OverviewPremium Benchmarked on the Basis of Profitability


Profit (Before Tax) - OverviewProfit (Before Tax) - OverviewPremium Benchmarked on the Basis of Profitability

Profit (Before Tax) - OverviewPremium Benchmarked on the Basis of Profitability

The above is sorted by profits before investment income


16

Premium Benchmarked on The Basis of Profitability

The top four companies continued to maintain their positions with respect to profits and gross written premium. This shows that, listed companies like ORIENT, ADNIC, OIC and EIC seem to built up large and profitable books of business.

Gross Premium Profit

ORIENT 1 1 #

ADNIC 2 2 #

OIC 3 3 #

EIC 4 4 #

AAAIC 5 10 (5)

SALAMA 6 9 (3)

ABNIC 7 13 (6)

DIN 8 7 1

UNION 9 15 (6)

TAKAFUL-EM 10 30 (20)

RAKNIC 11 27 (16)

NGI 12 14 (2)

TKFL 13 6 7

ASNIC 14 17 (3)

DNIR 15 8 7

DARTAKAFUL 16 25 (9)

WATANIA 17 21 (4)

DHAFRA 18 5 13

METHAQ 19 23 (4)

ALLIANCE 20 11 9

OUTFL 21 29 (8)

AFNIC 22 16 6

IH 23 20 3

AMAN 24 22 2

AWNIC 25 12 13

UFI 26 26 #

ASCANA 27 18 9

GCIC 28 28 #

SICO 29 19 10

AKIC 30 24 6

CompanyRanking

Indic


17

Total Net reserves as at 2019-Q3 increased by 2% when compared with the corresponding period on 2018-Q3. OIC

in term of booking technical provisions secured the highest rank. The ranking of top 5 companies when in terms

of Net technical provisions have remained identical to that of corresponding period of 2018.

Net Technical Provisions Net Technical Provisions




2%

-16%

9%

7%

12%

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

OIC ADNIC ORIENT AMAN EIC

AED

Mill

ion

s

TOP 5 COMPANIES

Claims Reserves 2019-Q3 Claims Reserves 2018-Q3

0%

12%

14% 56%

-4%6% -11% 40% 29%

8% 7%-5% 8% -38% 23%

7% 7% -17% -11% 28% -21% 75% 15% -12%

0

100

200

300

400

500

600

700

ALL

IAN

CE

SALA

MA

TKFL

TAK

AFU

L-EM

AA

AIC

NG

I

UN

ION

ASN

IC

RA

KN

IC

AB

NIC

AFN

IC

AW

NIC

WA

TAN

IA

MET

HA

Q

DA

RTA

KA

FUL IH

DN

IR

DH

AFR

A

ASC

AN

A

UFI

DIN

OU

TFL

GC

IC

SIC

O

AED

Mill

ion

s

REMAINING COMPANIES

Claims Reserves 2019-Q3 Claims Reserves 2018-Q3


18

Net Reserves as Percentage of Net Written Premium

Aman and Alliance Insurance were observed to be outliers due to their Individual life mathematical reserve

amounting to AED 22 million and AED 565 million respectively .These proportion of Individual life mathematical

reserve over net reserves is around 89% and 94% respectively which presents a big proportion in comparison

to other life companies who have large portfolio of Individual life business. Hence, they have been excluded

from the above analysis.

0%

50%

100%

150%

200%

250%

TKFL

AD

NIC

SIC

O

DH

AFR

A

MET

HA

Q

GC

IC

AA

AIC

AW

NIC

OIC EIC

AB

NIC

NG

I

OR

IEN

T

ASN

IC

DN

IR

UFI

TAK

AFU

L-EM

AFN

IC

ASC

AN

A

OU

TFL

WA

TAN

IA

DA

RTA

KA

FUL IH

RA

KN

IC

SALA

MA

UN

ION

DIN

RESERVES AS % OF NET WRITTEN PREMIUMS


19

Weighted average loss and combined ratio

had a declining trend over the past few

years until 2018-Q3. This year we have seen

an increase as compared to the previous

year. The gap between Combined and Loss

ratio has also seen an increase to 31% in

2019-Q3 as compared to 30% in 2018-Q3 and

28% in 2017-Q3.

The weighted average loss and combined ratio

increased slightly when compared to the

corresponding period of 2018.

For 2019-Q3, the highest combined ratio of 367% was

reflected by AKIC whereas the lowest loss ratio was

also depicted by AKIC with 96%. The company is acting

as an outlier and is been removed from the analysis

due to presentation purposes.

Excluding AKIC, the highest combined ratio is

exhibited by GCIC at 122% whereas; the lowest

combined ratio is evident for DHAFRA.

For Takaful companies we have consolidated the

policyholders and shareholders P&L for comparative

purposes. A company is deemed to be profitable from an

underwriting perspective if the combined ratio is below

100%.

Loss Ratio is computed as Net Incurred Claims over Net

Earned Premium.

Combined Ratio is calculated as ratio of net Incurred

Claims along with expenses and net commissions over net

earned premiums.

Loss Ratio and Combined Ratio

0%

20%

40%

60%

80%

100%

120%

140%

GC

IC

OU

TFL

TAK

AFU

L-EM U

FI

ALL

IAN

CE

RA

KN

IC

AB

NIC

DA

RTA

KA

FUL

NG

I

MET

HA

Q

WA

TAN

IA

ASC

AN

A

UN

ION IH

AM

AN

OIC

SALA

MA

AD

NIC

AA

AIC

AFN

IC EIC

AW

NIC

SIC

O

ASN

IC

OR

IEN

T

TKFL

DN

IR

DIN

DH

AFR

A

LOSS & COMBINED RATIO

Loss Ratio 2019-Q3 Combined Ratio 2019-Q3 Weighted Avgerage Loss Ratio Weighted Avgerage Combined Ratio

78%71%

63% 59% 61%

100% 98%92% 89% 92%

0%

20%

40%

60%

80%

100%

120%

2015-Q3 2016-Q3 2017-Q3 2018-Q3 2019-Q3

LOSS & COMBINED RATIO

Loss Ratio Combined Ratio


20

The above is sorted in respect with loss ratio of the companies. As evident from above UFI and

GCIC have relatively low loss ratios however, the expenses push the combined ratios well above

100% resulting in underwriting loss for the companies.



















Loss and Expense Ratio Overview




The above is sorted in respect with loss ratio of the companies. As evident from above UFI and ALLIANCE have low loss ratios well below 100%, however, the expenses push the combined ratios above 100% resulting in underwriting loss for the companies. AKIC have been excluded for the fact that it was an outlier with loss ratio and expense ratio at -96% and 463% respectively.

0%

20%

40%

60%

80%

100%

120%

140%

AB

NIC

TAK

AFU

L-EM

MET

HA

Q

AD

NIC

RA

KN

IC

ASN

IC

GC

IC

OIC

OU

TFL

ALL

IAN

CE

AA

AIC

NG

I

WA

TAN

IA IH

ASC

AN

A

AFN

IC

DA

RTA

KA

FUL

AW

NIC

OR

IEN

T

EIC

SIC

O

UN

ION

AM

AN

DIN UFI

DN

IR

SALA

MA

DH

AFR

A

TKFL

Loss and Expense Ratio

Loss Ratio 2019-Q3 Expense Ratio 2019-Q3

The graph comprises of all the expenses recorded for the period by the listed companies, including other operational expenses. Over the years, the listed companies have witnessed a gradual but rising expense trend. If the same trend is to continue in future, the combined ratio for the listed companies will cross 100% mark.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

2015-Q3 2016-Q3 2017-Q3 2018-Q3 2019-Q3

EXPENSE RATIO 5 - YEAR TREND


21

Expense Ratio

The above ratio has been computed as General and administrative expense as a percentage of Net Earned Premium. According to the above, the highest expense ratio during 2019-Q3 was 56% reflected by SICO, while the lowest expense ratio of 14% being exhibited by SALAMA. The weighted average ratio for the industry stood at 23%. AKIC was excluded from the above as it was an outlier. The larger business written reduces the expense ratios. However, taking earned premiums as base the lowest G&A expense ratio when analyzed by gross written premium for DIN and ABNIC has shifted on higher side. The expense ratio is worked out as: Expense Ratio = General and administrative expense as a percentage of Net Earned Premium

0%

10%

20%

30%

40%

50%

60%

SIC

O

AM

AN

UFI

GC

IC

DH

AFR

A

ALL

IAN

CE

AB

NIC

TKFL

AA

AIC

OU

TFL

AFN

IC IH

DIN

NG

I

MET

HA

Q

ASC

AN

A

UN

ION

AW

NIC

DN

IR

DA

RTA

KA

FUL

OR

IEN

T

TAK

AFU

L-EM

ASN

IC EIC

AD

NIC

WA

TAN

IA

OIC

RA

KN

IC

SALA

MA

G&A EXPENSE AS A RATIO OF NET EARNED PREMIUM

G&A Expenses Ratio 2019-Q3 Weighted Average Ratio


22

Expense Ratio

The highest expense ratio for the 2019-Q3 was recorded by SICO at 30%, while the lowest expense ratio of 4% being reflected by DIN. The weighted average ratio for the industry stood at 9%. It is commonly believed that G&A expense ratio should be analyzed on the basis of gross written premiums for the company hence, the same is included in our analysis. AKIC was excluded from the above analysis because it was an outlier. However, as may be expected, larger companies that have extensive business scale have lower expense ratio, as they have sufficient business to absorb the cost base. Expense Ratio = General and administrative expense as a percentage of Gross Written Premium For Takaful companies, same has been used for comparative purposes and wakala fees is ignored, as wakala fees is a positive in one account and a negative in the other.

0%

5%

10%

15%

20%

25%

30%

35%

SIC

O

GC

IC

AFN

IC

ASC

AN

A

AW

NIC IH

ALL

IAN

CE

UFI

AM

AN

MET

HA

Q

TAK

AFU

L-EM

TKFL

NG

I

ASN

IC

DH

AFR

A

DA

RTA

KA

FUL

UN

ION

SALA

MA

WA

TAN

IA EIC

RA

KN

IC

OIC

AA

AIC

DN

IR

OU

TFL

OR

IEN

T

AD

NIC

AB

NIC

DIN

G&A EXPENSE AS A RATIO OF GROSS WRITTEN PREMIUM

G&A Expenses Ratio 2019-Q3 Weighted Average Ratio


23

The highest commission expense ratio was for SALAMA at 48%, whereas the lowest commission ratio was recorded by ABNIC at -36%. Industry's average was at 6% for commission expense. The commission expense considered is the net commission (commissions paid less commissions earned); a negative ratio signifies that the commissions earned outweigh the commissions paid. In UAE market, it is common practice for companies to cede out large proportion of commercial lines business and benefit from the reinsurance commissions, which is also evidenced by the low net commission ratio. It is felt that there is an inherent need to optimize reinsurance arrangements so that companies can benefit from underwriting profitable business without passing the risk and reward to re-insurers and just acting as fronting partners; at the same time not effecting their solvency position.

Expense Ratio

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

SALA

MA

UFI

DN

IR

DA

RTA

KA

FUL

RA

KN

IC EIC

OU

TFL

TAK

AFU

L-EM

ASC

AN

A

WA

TAN

IA

GC

IC

AM

AN

UN

ION

OIC

NG

I

TKFL

AFN

IC

ALL

IAN

CE

OR

IEN

T IH

AK

IC

AW

NIC

ASN

IC

AD

NIC

AA

AIC

SIC

O

DH

AFR

A

DIN

MET

HA

Q

AB

NIC

COMISSION EXPENSE RATIO

Commission Expense Ratio 2019-Q3 Weighted Average Ratio


24

The shareholders of the listed insurance companies had been experiencing the increasing ROE over the periods. The

ROE for the period under analysis was at 8%. This is slightly lower from the corresponding period of 2018 however, it

is stable.

The highest return on equity of 19% was reflected by AMAN whereas the lowest return on equity of -11% depicted

by TAKAFUL-EM. The average for the industry was at 8% (2018-Q3: 9%, 2017-Q3: 8%)

The return on equity is calculated as a ratio of net profit recorded for 2019-Q3 to a total of shareholder's equity

at the beginning of the period.

Return on Equity

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2016-Q3 2017-Q3 2018-Q3 2019-Q3

RETURN ON EQUITY TREND

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

AM

AN

DH

AFR

A

TKFL

OR

IEN

T

DIN IH

WA

TAN

IA

AFN

IC

AD

NIC EIC

DN

IR

OIC

UN

ION

ALL

IAN

CE

NG

I

SIC

O

MET

HA

Q

SALA

MA

ASC

AN

A

AB

NIC

AW

NIC

ASN

IC

AA

AIC

AK

IC

DA

RTA

KA

FUL

UFI

RA

KN

IC

GC

IC

OU

TFL

TAK

AFU

L-EM

RETURN ON EQUITY FOR LISTED COMPANIES

ROE 2019-Q3 Weighted Avgerage Ratio


25

Cash to Invested Asset Ratio

Insurance Receivables Cash to Invested Asset Ratio


Conclusion Insurance Receivables Cash to Invested Asset Ratio

Insurance Receivables Cash to Invested Asset Ratio

The above ratio illustrates the ratio of cash deposits to total invested assets. Weighted average ratio

for the listed companies of UAE was 36%. With OUTFL having the highest levels of 100% invested assets

maintained as cash, while the lowest cash ratio was maintained by AWNIC at 9%.

The asset mix compares the invested assets as a proportion of total assets for the listed companies for the 2019-Q3. AWNIC had the highest proportion of 86% of invested assets, while the lowest proportion of 4% was witnessed by OUTFL. The above chart is sorted according to invested assets for the companies.

The asset mix compares the invested assets as a proportion of total assets for the listed companies for the first half 2019. AWNIC had the highest proportion of 85% of invested assets, while the lowest proportion of 4% was witnessed by OUTFL. The above chart is sorted according to invested assets for

0%

20%

40%

60%

80%

100%

120%

OU

TFL

OR

IEN

T

TK

FL

RA

KN

IC

ALL

IAN

CE IH

SA

LAM

A

GC

IC

UFI

DH

AFR

A

NG

I

AA

AIC

UN

ION

AFN

IC

ASN

IC

WA

TA

NIA

ASC

AN

A

DA

RT

AK

AFU

L

AB

NIC

ME

TH

AQ

AD

NIC

DIN EIC

OIC

SIC

O

DN

IR

TA

KA

FUL-

EM

AM

AN

AW

NIC

AK

IC

CASH RATIO

Cash to Invested Assets Ratio Weighted Average Cash to Invested Assets Ratio

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AW

NIC

GC

IC

ALL

IAN

CE

AM

AN

AK

IC

ASC

AN

A

AFN

IC

SIC

O

TKFL

DN

IR

NG

I

ASN

IC

DH

AFR

A

AB

NIC EIC

AD

NIC

OIC IH

OR

IEN

T

TAK

AFU

L-EM

MET

HA

Q

DIN

RA

KN

IC

UFI

UN

ION

SALA

MA

WA

TAN

IA

AA

AIC

DA

RTA

KA

FUL

OU

TFL

Asset Mix

Invested Assets Non-Invested Assets


26

The insurance receivables are computed as a ratio of Insurance receivables of the company over gross written

premium of last 12 months.

The highest receivable ratio was observed by SICO at 102%, while the lowest receivables were recorded by TKFL

around 9%.

AKIC was not included in the above as it was acting as an outlier and was distorting the presentation.

The weighted average insurance receivables for the listed companies works out to be 29% for the 2019-Q3.

0%

20%

40%

60%

80%

100%

120%

SIC

O

MET

HA

Q

AB

NIC

UN

ION

RA

KN

IC

DH

AFR

A

ASN

IC

TAK

AFU

L-EM

GC

IC

DA

RTA

KA

FUL

EIC

UFI

WA

TAN

IA IH

DIN

NG

I

OR

IEN

T

DN

IR

AFN

IC

OU

TFL

AD

NIC

ALL

IAN

CE

AW

NIC

AA

AIC

SALA

MA

OIC

AM

AN

ASC

AN

A

TKFL



Conclusion Insurance Receivables




27

The listed companies of UAE recorded a positive growth of 10% in Gross Premiums in the nine months ended of 2019 from the corresponding period of 2018. However, a slight contradicting trend in Net earned premiums is observed with Net earned premiums declining by 0.8%. The profits in the nine months of 2019 have observed a decline of 3% when compared with the corresponding period of 2018. The total premiums written, by the listed insurance companies, during 2019-Q3 amounted to AED 18.8 billion, as compared to the premium written in the corresponding period of 2018 of AED 17.1 billion. The average premium retention ratio was at 42% for 2019-Q3. Total Profit by the listed insurance companies, for the period 2019-Q3 amounted to AED 1.36 Billion compared to profits of corresponding period of AED 1.4 Billion. The average loss ratio for all companies analyzed was 61% and average combined ratio was at 92%. This was slightly higher than witnessed in 2018-Q3 (loss ratio 2018 Q3: 59%, combined ratio: 89%)

Conclusion

GWP GROWTH T IM E L I N E

2015-Q3 2016-Q3 2017-Q3 2018-Q3

13.5 Bi l l ion

2019-Q3

14.7 Bi l l ion 16.6 Bi l l ion 17.09 Bil l ion 18.7 Bi l l ion

S U M M A R Y

2 0 1 9 - Q 3

CombinedRatio

Loss Ratio

PRO F I T GROWTH T IM E L I N E

2015-Q3 2016-Q3 2017-Q3 2018-Q3

235 Mil l ion

2019-Q3

733 Mil l ion 1.17 Bil l ion 1.42 Bil l ion 1.36 Bi l l ion

CAGR

GWP Growth

8%

92%61%

ABNIC

HighestGrowth in

GWP

102%

UFI

HighestGrowth in

Profi t

198%

B A D R I M A N A G E M E N T C O N S U L T A N C YW W W . B A D R I C O N S U L T A N C Y . C O M

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D I S C L A I M E R

The data represented in our report was gathered from publiclyavailable information, and the financial statements released by thecompanies. We have undertaken an analysis of the Key Performance Indicators(KPIs) of the listed insurance for the 2019-Q3. The data has beenextracted from 2019-Q3 financial statements of those companieswhich were publicly listed. While we have tried to ensure accuracy in the data input andevaluation process, in view of the natural scope for human and/ormechanical error, either at input or during analysis, we accept noliability whatsoever for any loss or damage resulting from errors,inaccuracies or omissions affecting any part of this publication. If youcome across an error or have a query, do write to us.Due to limited information we are unable to segregate between lifeand non-life. Once all companies start publishing financial statementswith uniform level of segregation, this can be done.In certain cases, we needed to combine certain items together forcomparison purposes. E.g. Where XOL Reinsurance Premium hasbeen shown separately we have added it to Reinsurance Premiumexpense and deducted from Net Earned Premium.

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Badri Management Consultancy is proud to present the 2019-Q3 report. We have adedicated team that is working on research to bring you research reports. Our doorsare open for your feedback, and we welcome them. Feel free to inquire about thereport. To get in touch with our team contact us at [email protected]

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