Arab Insurance Group (Arig) yesterday announced a net loss of $28.6 million (Dh104.9m) for its 2008 financial year against net profit of $23.7m for the previous year.
The loss represents 10.6 per cent of the group's average shareholders' equity for the year. Though Arig did not have direct exposure to troubled assets or failed financial institutions, it could not escape write-downs on its reduced equities portfolio.
Invested assets stood at $678.5m at the end of 2008 against $711.7m in 2007, of which 59.4 per cent were held in cash or similar instruments. Write-downs on investments amounting to $35.8m remained unrealised.
The insurance firm registered an underwriting loss of $15.9m that is reflective of the absence of investment income whereas the technical result, ie premium less claims less acquisition cost, advanced to $9.6m against $3m loss in 2007. Over the year, Arig's loss ratio improved to 76.1 per cent against 81.6 per cent in 2007 and combined ratio to 101.8 per cent versus 106.3 per cent in 2007 on net premiums.
The group's reinsurance portfolio expanded by 12 per cent to $280.7m for the year against $250m for 2007. Non-life gross premium grew 11 per cent to $219.7m and life portfolio increased by 19 per cent to reach gross premium income of $61m.
Yassir Albaharna, CEO of Arig, said: "2008 has put the whole financial services industry to a test and due to its large portfolio under management Arig could not completely isolate itself from global trends. However, what is important is that the financial fundamentals of the company have not been compromised. Our solvency remains very strong and technical results have markedly improved.
"Due to the structure of our investments we see limited further downside. Reinsurance markets, which are cyclical, have started to regain attraction."