LISTED INSURANCE COMPANIES PERFORMANCE ANALYSIS OF UAE€¦ · Out of 30 Insurance Companies, 9...
Transcript of LISTED INSURANCE COMPANIES PERFORMANCE ANALYSIS OF UAE€¦ · Out of 30 Insurance Companies, 9...
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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
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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
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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%
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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
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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.
Gross Written Premium
Gross Written Premium
Retention RatioGross Written Premium
Gross Written Premium
Retention Ratio
Profit before and after Investment Income - OverviewRetention RatioGross Written Premium
Gross Written Premium
Retention RatioGross Written Premium
Gross 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
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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
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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
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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
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The retention ratios have been calculated as a ratio of net written premiums to gross written premium
The retention ratios have been calculated as a ratio of net written premiums to gross written premium
The retention ratios have been calculated as a ratio of net written premiums to gross written premium
The retention ratios have been calculated as a ratio of net written premiums to gross written premium
The retention ratios have been calculated as a ratio of net written premiums to gross written premium
The retention ratios have been calculated as a ratio of net written premiums to gross written premium
The retention ratios have been calculated as a ratio of net written premiums to gross written premium
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
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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) - Overview
Profit (Before Tax) - OverviewProfit (Before Tax) - Overview
Profit (Before Tax) - Overview
Profit (Before Tax) - OverviewProfit (Before Tax) - OverviewProfit (Before Tax) - Overview
Profit (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
Profit 2019-Q3 Profit 2018-Q3
-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
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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.
Profit (Before Tax) - Overview
Profit (Before Tax) - OverviewProfit (Before Tax) - Overview
Profit (Before Tax) - OverviewProfit (Before Tax) - Overview
Profit (Before Tax) - OverviewProfit (Before Tax) - Overview
Profit (Before Tax) - Overview
Loss Ratio and Combined RatioProfit (Before Tax) - OverviewProfit (Before Tax) - Overview
Profit (Before Tax) - OverviewProfit (Before Tax) - Overview
Profit (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
Profit 2019-Q3 Profit 2018-Q3
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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.
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.
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.
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.
Investment Income has contributed in generating profits for some companies. Insurance companies that
Profit (Before Tax) - Overview
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
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-50
0
50
100
150
200
250
300
350
400
ORIENT ADNIC OIC SALAMA EIC
AED
Mill
ion
s TOP 5 COMPANIES
Profit Before Investement 2019-Q3 Investement Income 2019-Q3
-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
Profit Before Investement 2019-Q3 Investement Income 2019-Q3
-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 Investement 2019-Q3 Investement Income 2019-Q3
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) - Overview
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
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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
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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
Net Technical Provisions Net Technical Provisions
Net Technical Provisions Net Technical Provisions
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
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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
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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
-
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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.
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.
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.
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.
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.
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.
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
Loss and Expense Ratio Overview
Loss and Expense Ratio Overview
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
-
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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
-
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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
-
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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
-
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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
-
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25
Cash to Invested Asset Ratio
Insurance Receivables Cash to Invested Asset Ratio
Insurance Receivables
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
-
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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
Insurance Receivables
Insurance Receivables
Conclusion Insurance Receivables
Conclusion Insurance Receivables
Conclusion Insurance Receivables
-
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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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F E E D B A C K
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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