Arab Insurance Group (ARIG) has announced a net profit of $7.6 million for the 2003, bringing a string of four consecutive loss-making years to a positive end.
The Group's return to profitability was marked not only by a steady improvement in the underwriting performance of its core reinsurance business but also by the positive returns contributed by all of its principal subsidiaries and associated companies. The 2003 earnings represent a 6.2 percent return on average shareholders' equity.
In late 2000, it became evident that a questionable expansion strategy, combined with adverse market conditions would lead to significant future losses. A strategic restructuring programme was launched building on the strength of ARIG as a regional Insurance Group and its core competence in reinsurance. However, the financial position of ARIG was further aggravated by the terrorist attacks in the US in 2001 and ARIG's involvement in the related aviation claims, a line of business ARIG was already determined to discontinue.
In addition, one of ARIG's reinsurance partners defaulted on payments leading to an overall loss for the group out of these events alone in excess of $60 million.
Various initiatives were undertaken, among them a return to regional rather than international markets, selective and prudent underwriting, reduction of portfolio volatility and a strong focus on cost containment. All of these measures led to an underwriting profit of $9.8 million for 2003 as compared to underwriting losses of $22.9 million for 2002.
Market forces supported this development. Increases in reinsurance premiums over the last two years appear to be sustainable and financial markets provided a number of promising investment opportunities.
ARIG is one of the largest Arab-owned insurance and reinsurance companies in the Middle East. In addition to its reinsurance operations undertaken from its headquarters in Bahrain and overseas office in Tunisia, the group operates subsidiaries in Morocco, Egypt, Jordan and the United Arab Emirates (UAE). The Group also has a strategic presence in the regional market through its associated companies such as Bahrain-based Al Ahlia Insurance, Arab Lebanese Insurance Group in Lebanon and Assurances BIAT in Tunisia. — (menareport.com)
© 2004 Mena Report (www.menareport.com)
