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Board of Directors proposed a cash dividend of 30% BKIC records a net profit of BD 2.7 mn in 2015


February 21, 2016

Board of Directors, in their meeting held on Sunday, 21 February 2016, decided to propose to AGM, a cash dividend of 30% to the shareholders on the paid up capital of BD 7.15 mn, equivalent to 30 fils per share.

The Board announced that company’s results for 2015 were satisfactory, given the difficult situation prevailing in the region due to low oil prices and also due to severe competition in prices among insurance companies particularly in motor and medical insurance lines.  The net profit recorded was BD 2.7 mn compared to BD 4.2 million in 2014.  The decrease was mainly due to drop in net investment income from BD 2.2 mn in 2014 to BD 1.1 mn in 2015. In 2014 there was profit of BD 1.5 mn on sale of investment property. Also in 2015, there were new expenditures like contribution to newly established “Hit & Run Fund”, amounting to BD 112,000 (for 27 months effective October 2013) and a provision of BD 145,000 towards Zakat in Kuwait office in accordance with the regulations of the country.  The profit reduced by BD 57,000 due to KD/BD exchange rate. The additional impairment during the year for investment was BD 304,000. At the end of the year a loss of BD 386,000 was booked towards share of losses in one of the strategic investments as per their management accounts.  

However, it is worth noting that underwriting profits increased by almost 2.4% from BD 2.96 mn in 2014 to BD 3.03 mn in 2015.

Shareholders Equity decreased from BD 35 mn in 2014 to BD 34.2 mn in 2015 on account of decrease in currency translation reserve due to unfavourable KD/BD exchange rate. Invesments fair value reserve also decreased to reflect changes in market values of the investments.  The return on equity was 7.92% (12.11% in 2014) and earnings per share was 38 fils against 59 fils in 2014.

For the quarter ending 31 December 2015, gross earnings was BD 3.6 mn (BD 3.6 mn for the same period in 2014). Net claims decreased to BD 1.8 mn (BD 2.1 mn for the same period 2014). Consequently technical profit increased to BD 1.03 mn in 4th Quarter 2015 (BD 0.62 mn for the same period 2014). Investment income during 4th Quarter 2015 increased to BD 244,000 (BD 115,000 for the same period last year). Net profit was BD 519,000 in 3 months ending 31 December 2015 as compared to BD 536,000 for the same period last year.

Mr. Ebrahim Al Rayes, CEO, said that gross written premium decreased by 4% from BD 39.8 mn in 2014 to BD 38.1mn in 2015 mainly due to decrease in premium in medical class caused by non-renewal of some major accounts. However, this reflected positively on the technical results to record an increase of 2.4% in insurance profits.

Additionally, conditions and premium rates prevailing in reinsurance market created severe competition among insurance companies in writing large risks which represent a large portion of our insurance portfolio. This had the effect of reducing the premium of some of our large accounts.

On business development, in 2015 the Company established online connectivity with the Traffic Department to ensure that motor policies are uploaded on issuance so that they appear in the Traffic Department records.

The Company also completed development of a software system which will allow brokers and travel agents to issue insurance certificates at their offices. An agreement was also signed with EGovernment for selling the Company’s insurance products through their website, the process for the same is on and the service is expected to commence this year.

Mr. Al Rayes said that International Credit Rating Agency AM Best, after review of Company’s financials and operations, has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of "a-". The outlook for both ratings is stable. He is hopeful that better results will be achieved during 2016 despite the competition in insurance market, given the company’s leadership position and reputation in Bahrain and Kuwait markets. He added “We thank our clients for these achievements, as well as the unlimited support from our shareholders, especially Gulf Insurance Group and their holding (Kuwait Projects Company). I would also like to express my sincere appreciation to our dedicated employees for their efforts and all the concerned regulatory authorities in Kingdom of Bahrain & State of Kuwait.”