Detailed analysis of Accumulated Losses
Islamic Arab Insurance Company PSC (SALAMA)
Date: | 12 August 2022 | Period of Financial Statements | Year 2022 | ||
Accumulated losses: | AED 383,864,000 | Accumulated losses to capital ratio | 31.70% | ||
Main reasons leading | These losses were accumulated over several previous years due to | ||||
to these accumulated | significant losses in 2012-2013 and 2015-2016, totaling AED 843m | ||||
losses and their | |||||
primarily from the | loss-making UAE motor business | and Best Re | |||
history: | |||||
incurred losses. | |||||
Thailand Floods and other reinsured losses in 2012 caused significant | |||||
technical losses in subsidiary Best Re (Best Re sale was concluded by | |||||
SALAMA in 2019). According to reports, these floods were the worst in | |||||
last five decades with economic loss of USD 45.7 billion (AED 168 | |||||
billion) and hence it is considered as one of the top five costliest | |||||
natural disasters in modern history. | |||||
The other area that has contributed to losses was Motor business in | |||||
the UAE which by its very nature is highly competitive and volatile. In | |||||
2015 the motor insurance business faced many challenges leading to | |||||
losses for many operators in the UAE market. | |||||
From 2017, the company managed to turn around its operating | |||||
performance and constantly reporting net profits. SALAMA reported | |||||
net profit of AED 27.5m in 2017, AED 2.0m in year 2018, AED 55m in | |||||
year 2019, AED 149m year 2020, AED 40.05m year 2021 and 12.18m in | |||||
H1 2022. | |||||
Measures to be taken | The Board appointed in beginning of year 2019 has implementing a | ||||
to address | three-pronged strategy to improve the core business | profitability, | |||
accumulated losses: | |||||
enhance the investment income, and implement superior corporate | |||||
governance standards. There has been considerable improvement in | |||||
underwriting profitability of SALAMA in 2019 due to focus on the | |||||
quality of risk underwritten by the Company simultaneously | |||||
maintaining growth in total gross written contribution. The investment | |||||
portfolio is moving towards assets with low volatility and better risk | |||||
adjusted returns. It | is expected that the Company will continue to | ||||
deliver on its profitability objective. |
Fahim Alshehhi
Chief Executive Officer
SALAMA - Public
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SALAMA - Islamic Arab Insurance Company PSC published this content on 15 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 August 2022 04:52:01 UTC.