By: Ramy Sameeh

Abu Dhabi – Mubasher: Al Wathba National Insurance Company (AWNIC) is examining new investment opportunities both locally and abroad while focusing on expansions within the UAE, the company’s general manager, Bassam Chilmeran, said on Monday.

However, current unrest in the region has halted the company’s ability to expand, Chilmeran told Mubasher in an interview.

The MENA region is experiencing tension and turmoil amid growing fears that violence in Yemen will increase following the Saudi-led military campaign against Houthi rebels.

The UAE insurance market is one of the largest in the Arab world in terms of insurance premiums, which totalled AED 33 billion by the end of 2014, up 12% compared to figures from 2013.

The number of insurance firms operating in the UAE has reached 60, according to a previous statement by the Insurance Authority’s (IA) general manager.

AWNIC received a long-term BBB+ rating with the outlook of ‘Stable’ from Standard & Poor’s, reflecting its stable performance and strong financial position, said Chilmeran, who is also a member of the Chartered Insurance Institute (CII) in London.

Acquisitions and expansions

Asked about AWNIC’s plans and new expansions, the general manager said his company is looking for ways to increase investments and diversify income sources.

Last year the insurance firm acquired a 22.66% stake in Foodco, raising its stake to 22.8%.

AWNIC’s other investments include Oman’s Vision Insurance, Iraq’s OR International Insurance and the UAE’s Vision Capital Brokerage.

The Egyptian market is among the promising markets in the region, stated Chilmeran, noting that his company could invest there should a suitable opportunity arise.

He added that the Egyptian market is currently saturated and with strong competition between.

Egypt’s insurance sector recorded significant growth over the past year, despite declining economic activity following the 2011 revolt. Investments in the sector rose from EGP 42 billion ($5.5 billion) in 2013 to EGP 48.5 billion ($6.35 billion) in 2014, according to official statistics by the Egyptian Financial Supervisory Authority (EFSA).

Profit expectations

AWNIC’s profits retreated 28% in 2014 to AED 109.05 million, compared to AED 152.4 million in 2013.

Chilmeran attributed the decline to the sharp drop in oil prices during Q4-14. However, he said he expects a significant turn-around this year despite the continued fall in oil prices, which is affecting the region’s economies.

Oil prices plunged by more than 50% from June 2014 and until the end of March  due to an abundance in supply and retreating demand as well as a decline in the dollar’s strength, in addition to a lack of clarity regarding global economic growth.

“We reported high profits during the first nine months of 2014, but the oil price decline affected stock market confidence and resulted in a drop in our profits from investments in the fourth quarter,” he said.

He added that insurance operations also retreated due to strong competition in the local market, prompting the company to limit its insurance premiums and focus on other technical operations.

According to AWNIC’s financial statements, net profit from insurance operations dropped 39.5% to AED 17.57 million in 2014, down from AED 29.07 million in 2013.

Optimistic outlook

The IA’s newly-issued instructions will have a positive impact on the sector and will be in-line with prevailing practices in many countries worldwide, the general manager said.

The IA recently issued a new set of financial regulations for insurance and Takaful insurance firms, a step which experts believe will contribute to raising these companies’ credit ratings and boost the positive outlook for global financial and valuation institutions for the UAE.

“I’m quite optimistic, despite the strong competition in the market,” Chilmeran told Mubasher, adding that his company is planning to launch several new services and products.

Shareholders at Abu Dhabi-listed AWNIC on Monday approved a 15% cash dividend, amounting to 15 fils per share and totalling AED 31 million, for 2014.

 

Translated by: Nada Adel Sobhi