GCC: Earnings of listed insurers jump by 22.1% as investments generate higher returns in Q1 2024

Higher Investment Income averaging at a quarterly ROI of 1.7% (Q1 2023: 1.3%) has boosted the first quarter earnings of 77 listed insurers in the GCC region. Net Profit After Tax increased by 22.1% reaching USD 619mn but lowers to 10.3% on exclusion of the exceptional growth in earnings of 47.8% in KSA, noting that corporate tax reported for the first time by UAE insurers has consumed about a tenth of the pre-tax earnings in UAE according to the Q1 2024: GCC Performance Periodical by Insurance Monitor in association with Lux Actuaries and Consultants.

KSA apart, the report finds that underwriting performance has generally weakened across the region by 1.5% with combined ratios reaching 99.2% in Q1 2024 and exceeding 100% in UAE and Oman with further strain expected in the quarters ahead following the adverse weather conditions experienced in April 2024, the impact of which is reportedly still developing.

The report also highlights further deterioration from YE 2023 in the solvency margins for a number of UAE insurers in breach of regulations that collectively account for at least 12% of the Insurance Revenue in Q1 2024. Among these, TAKAFUL-EM has reportedly received regulatory clearance to restructure capital although a subsequent Board recommendation to increase capital further is expected to cause delays.

In contrast, KSA’s insurance sector has maintained combined ratios at ~99% with a noteworthy improvement of 8% points in the performance of motor business dropping to 93% in Q1 2024. The strong growth in earnings has also improved solvency positions for some KSA insurers notably SALAMA from 32.8% at YE 2023 to 106.4% while UCA is reportedly exploring merger opportunities in parallel to a capital increase of SAR 300mn subject to approval.

That said, regardless of solvency, the new minimum capital requirement of SAR 300mn by YE 2024 puts at least five other insurers on the radar.

In terms of market growth, GWP and revenue growth, has slowed down in KSA to 14.3% and 20.2% in Q1 2024 from 30.8% and 27.2% in Q1 2023 respectively, mainly associated with personal lines of business while revenue increased by 23.9% in the UAE, although growth is largely concentrated among the top four players (including DIN) whose combined share has risen to 62% in Q1 2024 from 56% in Q1 2023.  

The Q1 2024: GCC Performance Periodical features insights on the financial performance of listed insurers in the region with data tables, stock performance, capital management, merger and acquisition activity and financial strength ratings.  

This is a complimentary publication.