The UAE insurance industry's profit before tax increased by 8%, reaching AED2.0bn ($545m) in the first nine months of this year, from AED1.8bn in the corresponding period in 2023, points out Badri Management Consultancy which specialises in actuarial services.
In a report, titled “UAE—Listed Insurance Industry Performance Analysis”, Badri notes that only nine out of 27 companies, whose 3Q2024 financial results were analysed, reported a decrease in profits compared to the first three quarters of 2023.
Badri said, “These profit results are quite unexpected, considering the industry was impacted by significant claims during the unprecedented rains in April 2024. The current figures indicate that reinsurance companies have largely borne these losses. However, insurance companies may face higher reinsurance costs or need to book additional premiums due to reinstatement or adjustment premiums.”
On the bright side, Badri sees the UAE market showing a gradual increase in premium rates. It is hoped that the losses will bring about pricing discipline within the industry, encouraging companies that are not currently doing so to adopt proper risk-based pricing for retail lines.
Badri also points out that the proportion of industry profits driven by insurance service results dropped from 60% to 45%, crossing the key half-way point. In other words, more than half of the industry profits is not driven by insurance results, but by investment and other income.
Insurance revenue
Growth of insurance revenue in the UAE is likely to persist, fuelled by higher premiums and a shift in consumer preferences towards comprehensive motor insurance and increased adoption of home insurance.
Insurance revenue rose by 21% in the first nine months of 2024, reaching AED32.1bn ($8.7bn) compared to AED26.5bn in the corresponding period last year. This growth is likely to persist, fuelled by higher premiums and a shift in consumer preferences towards comprehensive motor insurance and increased adoption of home insurance.
Insurance service results
Insurance service results for the analysed listed companies experienced a 13% increase, from AED1.3bn to AED1.5bn. The leading five companies in this regard also encountered a 13% increase collectively, moving from AED1.3bn to AED1.4bn during the same period last year.
The five insurers with the biggest insurance service results for the first three quarters of this year (3Q2024) are DAMAN, ADNIC, Orient, Sukoon and Dubai Insurance.
Overall concentration of revenue and profitability in a handful of companies increased this year compared to the same period in 2023. While the revenue share (68% v/s 65%) and profit share (85% vs 78%) of the top five insurers increased slightly, their share in Insurance service results is now a massive 98% compared to 83% in 2023.
Solvency levels among companies are under growing pressure, with six of the 25 insurers reporting solvency failing to meet required criteria.
To download the complete report please click on this link.