Abu Dhabi-based Green Crescent Insurance Company (GCIC) posted a profit of AED40,000 (US$10,890) last year against a loss of AED4.7 million in 2013, after reducing costs as well as its exposure to the stock market.
GCIC’s GWP fell by 37.8% y-o-y to AED72.3 million at the end of 2014 due to selective pruning on its healthcare book of business. The insurer, however, managed to maintain its underwriting margin at a level of 14%, resulting in a total underwriting gain of AED13.5 million in 2014 compared to AED16 million a year ago.
Total annual operating costs fell from AED39.3 million in 2013 to AED28.3 million last year. GCIC said in 2013 there was an exceptional charge of AED10.8 million that the company recorded with respect to arbitration proceedings against Lane Clark and Peacock (LCP). The arbitration was a result of LCP’s failure to provide software implementation in line with GCIC’s specifications.
In 2014, the company reached an agreement with LCP for the full and final settlement of the claim between two companies totalling AED9.8 million. “Accordingly, the company reversed a provision of AED2.3 million and wrote off the remaining tangible asset of AED2.3 million. Excluding these exceptional charges, GCIC operating costs remained stable at AE28.3 million,” GCIC said.
GCIC modified its investment strategy last year by significantly reducing its exposure to the equity market, consequently posting a realised capital gain of AED11.9 million. Total investment income amounted to AED14.6 million as against AED18.6 million in 2013.
Last year, GCIC entered into a strategic alliance with AXA Group and local investment conglomerate, Kanoo Group. The two parties invested AED100 million in GCIC through a convertible bond last September, and this will be converted into 100 million shares valued at AED1 apiece within 12 months, increasing the insurer’s capital to AED200 million. The equity of the company stood at AED173 million at 31 December 2014 and the solvency position at 173% over the minimum requirement.
GCIC added that new regulatory developments in Abu Dhabi and Dubai, combined with the increase in insurance awareness and continuous medical inflation, bring the potential benefits as well as underlying risks in healthcare insurance.
As a result, it “will maintain a conservative underwriting approach and focus on selected segments of the market giving priority to bottom-line performance this year”.
AED1 = US$0.27