Bahrain Kuwait Insurance Company (BKIC) B.S.C. (trading code in Bahrain Bourse “BKIC” and in Boursa Kuwait “BKIKWT”) announced its consolidated financial results for the six months ended 30^th June 2023

The financial results for the three months ended 30^th June 2023

The consolidated financial results presented a net profit attributable to the shareholders of BD 1.264 million compared to BD 2.198 million for the same period last year. While this represents a decrease of 42% compared to the same period last year, it is important to note that these figures are based on the new accounting standards, IFRS17, which the company has successfully adopted, making it the first company in Bahrain to do so. The financial results for 2023, based on the new IFRS17 standards, indicate a decline compared to last year's reinstated results. This decline is primarily attributed to changes in accounting assumptions. Specifically, the change in the discounting rate in 2022, when reinstating the financials, resulted in a one-time exceptional increase in profit for that period in 2022 reinstated results. While this has impacted on the current year's figures in comparison to last year’s reinstated figures, it is important to note that the 2023 adjustments made reflect a more accurate representation of the financial performance going forward.

Earnings per share for the 2^nd quarter of the current year was 9 fils compared to 15 fils for the same period last year. The total comprehensive income attributable to the shareholders reached BD 0.981 million in Q2-2023 compared to BD 0.797 million in Q2-2022, registering an increase of 23%. The increase was mainly due to increasing fair value gains recorded in 2^nd quarter 2023 compared to the same period in 2022.

The Company achieved 0.3% growth in Insurance revenue from BD 24.739 million in the 2^nd quarter of last year to BD 24.813 million in the 2^nd quarter of the current year. The Insurance service results decreased by 56%, from BD 2.270 million in the 2^nd quarter of last year to BD 1.006 million in the 2^nd quarter of the current year. The Total investment income increased by 46%, from BD 1.050 million in the 2^nd quarter of last year to BD 1.538 million in the 2^nd quarter of the current year.

The financial results for the six months ended 30^th June 2023

The consolidated financial results for the half year period ended 30^th June 2023 presented a net profit attributable to the shareholders of BD 2.778 million, compared to BD 3.556 million of the same period last year, representing a decrease of 22%. Earnings per share were 19 fils during the current period compared to 24 fils of the same period last year. The total comprehensive income attributable to the shareholders was BD 2.531 million compared to BD 1.826 million for the same period last year, registering an increase of 39%.

The Company achieved 1% growth in gross written premium of BD 53.426 million during the first half of this year, compared to BD 52.710 million in the first half of last year.

The Insurance service result decreased by 32%, to BD 1.984 million in the current half compared to BD 2.921 million in the first half of last year. The net investment income increased by 41%, from BD 1.833 million in the first half of last year to BD 2.593 million in the first half of this year.

Despite growth in sales and significant improvement in investments performance, the company's net profit has declined compared to the previous year. To reiterate, this decline is primarily due to the change of IFRS17 discounting rate in 2022 when reinstating the financials, which resulted in a one-time increase in profit for that period in 2022.

The total shareholders’ equity as end of June 2023 is BD 41.172 million compared to BD 42.484 million as end of last year, representing a decrease of 3% mainly due to allocation towards increased shareholders’ dividends payouts. The total assets by the end of June 2023 reached BD 163.189 million compared to BD 149.875 million as end of last year, representing an increase of 9%. The net Insurance contract liabilities increased from BD 56.232 million at the end of the last year to BD 60.928 million at the end of the current period.

Board of Directors’ Comments:

Upon concluding their review of the company’s results and achievements, the Board of Directors expressed their satisfaction stating: “The Board is pleased with the results for the first six months of 2023. The Board continues to monitor the key strategic projects of the company and confirms that there is significant progress made including the implementation of IFRS17 since 1/1/2023. The Board is delighted by BKIC’s management team’s ability to adjust to the new accounting standards with ease regardless of the significant difference compared to the old accounting standards.

The combination of the support and confidence of the BKIC customers, business partners and the strong commitment and eager dedication of both management and employees, continue to produce positive results which the board is pleased with.

Once again, the Board would like to reiterate to its shareholders the news announced in April 2023 regarding the potential change in the shareholding structure of the company’s Parent, Gulf Insurance Group due to  its major shareholders, Kuwait Projects Company (Holding) (KIPCO) and FairFax Financial Holding Company Limited entering into an agreement whereby Kuwait Projects Company (Holding) (KIPCO)  agreed to sell the its shares in the Gulf Insurance Group totaling 46.32% to FairFax Financial Holding Company Limited  which will take effect after obtaining the required approvals of the relevant regulatory authorities.”

Chief Executive Officer’s Comments:

Echoing the sentiment of the Board, BKIC’s CEO Dr. Abdulla Sultan reiterated that the company's consolidated results in the 1^st half of 2023 are surely gratifying. Dr. Sultan also commended that the improved Investment income will allow the company to become more conservative in provisions and strengthen the core business reserves. Dr Sultan commented “We have always been conservative in generating ROI on our investment assets given that our A-rating requires us to allocate the majority of our investment assets into cash and A-rated securities to ensure we maintain a level of liquidity that allows to comfortably meet our liabilities and pay our claims. With the current interest rates, the Investment team has been generating exceptional returns and has managed to lock-in these yields for the coming years. This has allowed us to strengthen our provisioning and balance sheet to an exceptional level.”  Dr. Sultan advocated the confidence that the company’s streams of income would further improve in the coming periods.

He commented “We would also like to remind our shareholders that the company adopted completely new accounting standards in 2023 (IFRS 17) which resulted in a 6-month net profit of BD 2.778 million while last year’s audited financials based on IFRS 4, showed a 6-month net profit of BD 2.654 million. The new accounting standards were put into effect on 1/1/2023 and the company had to reinstate its 2022 financials to reflect IFRS17 for comparison purposes. It is worth mentioning that the assumptions applied in 2022 differed greatly from those currently applied as these new standards are a learning experience and the company continues enhancing its assumptions to become more conservative in 2023.”

Dr. Sultan also added “On this occasion I would like to thank all teams at BKIC Bahrain, BKIC Kuwait and our subsidiary Takaful International for successfully implementing the 2 major projects during the first half of 2023. The teams continue to demonstrate their outstanding dedication, hard-work and commitment to the company.”

Group Profile

It is worth mentioning that Bahrain Kuwait Insurance Company (BKIC) is the lead insurance company in the Bahraini market and a major player in Kuwait, with a credit rating of A- (Excellent) with stable outlook, by A.M Best which is the highest rating in Bahrain to be awarded to a local direct insurer, reflecting the financial strength of the company to meet its future obligations. GIG Bahrain is a subsidiary of Gulf Insurance Group (GIG) which is the largest insurance Group in Kuwait in terms of written and retained premiums, with operations in life and non-life as well as Takaful insurance. Gulf Insurance has become one of the largest insurance networks in the Middle East and North Africa with companies in Bahrain, Kuwait, Jordan, Egypt, Turkey, Algeria, UAE, KSA, Oman, Qatar, Syria, Iraq and Lebanon.

KIPCO – Kuwait Projects Company – is Gulf Insurance Group’s largest shareholder, followed by the Canadian-based Fairfax Financial Holding Ltd.

The full set of financial statements and the press release for the period ended 30^th June 2023 are available on the websites of Bahrain Bourse and Boursa Kuwait.