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March 8, 2015
The General Assembly of Bahrain Kuwait Insurance Company approved at their meeting held at BKIC Headquarter in Seef District, Kingdom of Bahrain on Sunday, 8th March 2015 the cash dividend of 35% (BD 2,502,500) of the paid up capital to the shareholders.
Mr. Murad Ali Murad – the Chairman of the Company presents in his report the insurance market situation in Bahrain, and said that the gross premium of Bahrain insurance market has been increasing steadily over the last three years at an average rate of about 8% per annum. On the other hand, underwriting profit has been showing a proportional decline during the period. This is primarily due to steep increase in loss ratio in Motor and Medical classes of business, which together constitute 42% of the total market premium. Intense competitive pressure on premium rates, and increasing volume of claims have been the primary causes for this situation. Property insurance portfolio, which constitutes about 18% of the total volume, operates on very thin margins. Low retention capacity of the market implies outflow of profitable premium at nominal commission terms which barely allow insurers to meet their costs of operation. However, your company continued its strategy in concentrating on profitable lines of business and has been able to achieve a 4% growth in premium income despite severe competition.
Mr. Murad also mentioned in his report about the economic and political situation in Bahrain and said in the past year, the company has achieved a few milestones that worth to mention. The Board has deliberated upon and approved Financial & Administrative Authority matrix which covers all aspects of the company’s operations as well as approved the Whistle blower policy. The Board has also discussed and approved matters related to corporate governance as required by the regulators in Bahrain, and these included Conflict of Interest and performance evaluation of the members of the Board and its committees. The Board has also approved amendments to the Procedural manual for prevention of money laundering as required by the CBB.
With regard to the credit rating, he stated that the international rating agency A.M. Best has affirmed the credit rating of the company “A- with stable outlook” after a review of the company’s operations during the 3rd quarter of the year. This rating reflects the company’s ability to meet all its financial obligations comfortably.
Mr. Ebrahim Alrayes – the CEO said that the Company registered an increase of 4% in Gross Premium from BD 38.2 mn in 2013 to BD 39.8 mn in 2014, despite severe competition among companies for business both in Bahrain and Kuwait markets. The increase was mainly contributed by FGA class as we could secure few new accounts during 2014. Gross Earnings also increased by 4 % from BD 14.2 mn in 2013 to BD 14.7 mn in 2014.
Net incurred claims increased by 10% from BD 7.5 mn in 2013 to BD 8.3 mn in 2014 mainly due to increase in motor claims of Kuwait and medical claims of Bahrain. IBNR provision also was increased by BD 130,000 based on the actuarial report. This resulted in decline in underwriting profit from BD 3.3 mn in 2013 to BD 3.0 mn in 2014.
Net Profit increased by 14.5% from BD 3.7 mn in 2013 to BD 4.2 mn in 2014 due to extraordinary gain of BD 1.5 mn recorded on sale of an investment property.
In the field of business development, Mr. Alrayes stated that the new website for online selling of personal lines products was launched in 2014. It is worth to mention that the website got Web award for 2014 among Insurance and finance companies. This site is considered as a pioneer in the industry, creative, innovative at the same time, simple to use. During 2014, the Company signed an agreement with Gulf Air wherein individual buyers of home travel and motor annual policies will get credit for free mileage under Falcon Frequent Flyer Programme. We developed and launched new motor comprehensive products with different benefits and different options, and a product to clients of limited income called Motor Economy Comprehensive product. We have also established a help desk to answer clients’ questions on insurance related matters over phone.
And the outlook for the year 2015, Mr. Alrayes said that falling oil prices will throw various challenges to insurance companies given the fact that oil sector is the major motivator of the economy. We expect the Governments may exercise more pressure on controlling of expenses and revenue spending. They may reduce the spending budget of service industries and postpone some projects. This will increase competition and increase in prices. We hope that the private sector will play a bigger role in activating the economy.