MANAMA, 18 February 2007 — Arab Insurance Group (Arig) has shown another year of strong performance, recording a net profit $30.4 million for financial year 2006 against $48.2 million a year ago. Despite ending below the previous year’s result, performance in 2006 has in fact exceeded that of 2005 if extraordinary items of $10.4 million in 2006 and $28.9 million in 2005 are ignored.
Arig’s board of directors has recommended a cash dividend of 10 percent on the company’s paid-up capital or 10 cents per share. The dividend remains subject to clearance by the Central Bank of Bahrain and approval at the company’s annual general meeting to be held on March 29.
Arig managed to further improve on its underwriting results and associated costs from reinsurance, in spite of a softening in the terms of trade that impacted the international reinsurance industry. The company was also able to isolate itself from the downward turn in the regional equity markets. Having reaped the benefits of its conservative investment policy and a positive performance in the global markets, investment earnings increased to $38.4 million (2005: $ 33.2 million).
Stricter underwriting discipline and portfolio screening resulted in a 4.2 percent reduction in gross premium written, which is now reported at $166.3 million (2005: $173.7 million). But its profitability driven approach leaves the company less concerned about absolute volume growth, especially as it has been developing new attractive business fields, which are expected to make a positive contribution to future years’ results.
Arig’s Singapore branch expanded premium income from Far East markets by 54.7 percent year-on-year, while the Group’s Islamic Takaful Re subsidiary firmly established itself with gross premium written of $15 million in 2006.
