Sources in the local UAE insurance market revealed that rising competition among the country’s insurance companies has resulted in a significant decrease in the cost of insurance. Consequently, some insurance firms were forced to dip in to their cash reserves in order to offset operating losses, said a recent report in Al-Bayan daily.
Market sources also added that the fierce competition is dimming any hopes of achieving future growth for the local insurance firms. Despite the concerns, only one of four different UAE insurance companies including Al-Ain National Insurance; Khazna Insurance; Bohayra Insurance; and Saqr National Insurance recorded a net loss.
The Al-Ain National Insurance Company generated Dh 28 million in net profits by the end of 2000, compared with Dh 26 million the previous year. The company’s total asset value grew to Dh356.8 million by the end of 2000, up from Dh 333 million in 1999. Al-Ain offered Dh70.16 earnings per share in 2000 compared with Dh65.28 the previous year.
The Khazna Insurance Company posted a net income of Dh33.6 million in 2000, compared with Dh30.18 million in the previous year. The General Assembly of the company decided to award Dh26.6 million worth of dividends to its stockholders, equivalent to seven percent of the company book value. Khazna’s total insurance installment value grew from Dh87.3 million in 1999 to Dh 90 million in 2000.
An increase in net profits was also experienced by the Bohayra Insurance Company, that reported Dh20.6 million in net profits during 2000 compared with Dh19.3 million the previous year. The value of the company’s insurance installments grew from Dh 110.3 million to Dh117.08 million during the same period, reflecting a 6.8 percent rise. Total asset value of Bohayra increased from Dh216.6 million to Dh 224.5 million during the same period.
On the other hand, the Saqr National Insurance Company saw a drop in net profits from Dh 10.199 million in 1999 to Dh8.275 million in 2000. Saqr’s general assembly agreed to distribute dividends to stockholders, equivalent to 25 percent of the company’s capital, which stands at Dh 40 million. The value of the company’s overall insurance installments increased to Dh67.4 million in 2000, up from Dh 62.7 million in 1999, reflecting a nine percent rise.
The total value of the UAE insurance industry is estimated at Dh2.4 billion in 2000. This figure is expected to rise to Dh2.5 billion by the end of 2001, reflecting 4.3 percent increase. The same sources revealed that regardless of the governments’ compulsory health insurance regulations, there is a growing demand for these services by the public. –(MENA Report)
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