Salama back in profit for Q1 2011

06/06/2011 00:00 AST

Dubai-based Islamic Arab Insurance Company (Salama) reported net profit of AED 30.7 million ($8.36 million) for Q1 2011, a significant y-o-y and q-o-q improvement from a net loss of AED 4.4 million ($1.2 million) in Q1 2010 and net profit of AED 9.9 million ($2.7 million) in Q4 2010

The improvement in earnings came on the back of the progress in core operating income. Net underwriting income leaped from AED 17.9 million ($4.87 million) a year ago to AED 72.8 million ($19.8 million). Salama's gross written premiums witnessed a y-o-y growth of 39.7 per cent in Q1 2011 to reach AED 735.2 million ($200.2 million).

The retention rate advanced from 83 per cent to 80 per cent while net premiums improved significantly by 49.3 per cent y-o-y to AED 652.9 million ($177.7 million). Gross claims increased by 5.4 per cent y-o-y. The combined ratio dropped from 91.7 per cent in Q1 2010 to 72.8 per cent in Q1 2011 as a result of the drop in both the loss ratio and expense ratio. The expense ratio declined from 40 per cent a year ago to 36.3 per cent while the loss ratio declined from 51.7 per cent to 36.5 per cent.

Investment income dropped 63.8 per cent to AED 3.9 million ($1.06 million). Salama has an active investment portfolio which increased by 4.6 per cent from AED 1.38 billion ($375.7 million) in the year ended December 2010 to AED1.45 billion ($394.8 million) in Q1 w2011. Shari'ah-compliant placements formed 45.4 per cent of the total investment portfolio in 1Q11. The placements resulted in average yield of 0.22 per cent to 4.75 per cent. Other investments included Sukuk and government bonds forming 17.8 per cent, available for sale investments forming 18.6 per cent, while the remaining 18.2 per cent were invested in shares and securities, mutual funds, and other externally managed portfolios.

CPI Financial