ADNIC Reports Solid Profits and Strong Growth for First Quarter 2014
14 May 2014
ADNIC has embarked Year 2014 with profitable growth both in revenue and underwriting income driven by a renewed commitment to deliver sustainable profitability. We are pleased to share with you a summary of our financial results for the period ended 31 March 2014.
Gross Written Premium – Gross written premium for the period ended 31 March 2014 grew by 33% to AED 993 million from AED 747 million during the same period last year. Several anticipated energy and property projects have now been underwritten and are reflected in our financial results.
Premium Retention – The overall premium retention ratio has decreased to 43% for the period ended 31 March 2014 compared to 52% during the same period last year. The overall premium retention ratio is lower due to one-off high value and complex projects underwritten in Q1’2014.
Net Underwriting Income – Net underwriting income for the period ended 31 March 2014 increased by 8% to reach AED 69 million compared to AED 64 million for the same period of 2013. The underwriting income growth has been achieved through prudent underwriting and effective claims management.
Net Investment and Other Income – Net investment and other income for the period ended 31 March 2014 stands at AED 36 million against AED 21 million for the same period of 2013. The strong performance of the UAE equities market in the first quarter helped us generate higher profits on our trading portfolio coupled with higher stock dividend payouts. Our change in asset allocation to higher yielding assets like fixed income and real estate has borne fruit as income from these asset classes was also up sharply compared to the same period last year.
Net Profit – The net profit achieved during the period ended 31 March 2014 is AED 55 million compared to AED 37 million reported during the same period of 2013. This has resulted due to various measures adopted including continued focus on enhancing profitability. We are hopeful that these measures shall deliver strong results through the year.
Change in Accounting Policies:
The company has changed its accounting policies for Unearned Premium Reserves as well as Unearned Reinsurance Commission Income effective January 01, 2014 with the objective to provide more relevant and reliable information of the company’s financial performance. This change will ensure that the users of our financial statements will appreciate ADNIC’s transition to International Financial Reporting standards to recognize revenue more accurately over the effective period of insurance contract coverage.
Furthermore, it will allow the management to strategize more effectively and establish more robust action plans to enhance the company’s profitability. This change in accounting policies is also in line with the Draft UAE Insurance regulations which are expected to be implemented soon.
Had the above changes not been adopted in the current year, Net Profit for the first quarter 2014 would have been higher by AED 42 million and consequently, the Net Profit would have reached AED 97 million as of March 31, 2014.
Customer Service Enhancement – ADNIC has recently embarked on a full-scale e-commerce strategy and consequently implemented its first “ADNIC Mobile” Application. This feature will be expanded to other consumer lines products in the near future.