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Khaleej Times
10 hours ago
- Business
- Khaleej Times
UAE insurers continue to recover from 2024 rains, post 52% jump in H1 2025 profits
The UAE insurance industry continued its recovery path after the stress scenario of the unprecedented April 2024 rains, as insurers' net profit jumped 54 per cent to Dh2 billion in the first half of 2025, according to Badri Management Consultancy. The increase in profitability was supported by sustained premium rate increases and improved risk‐based pricing. Industry insurance revenue grew by 19 per cent, reaching Dh24.2 billion in the first half of 2025, compared to Dh20.3 billion in the same period last year. This reflects the continuation of favourable underwriting conditions across major business lines, particularly motor and medical. In April last year, unprecedented rains caused huge losses to UAE insurance companies in terms of motor and property damage. It is estimated that the losses ran into billions of dirhams. To cope with this challenge, insurers increased premiums to offset the losses. According to Badri, the leading five companies continued to consolidate their positions, accounting for Dh1.3 billion of the overall insurance service result — up 31 per cent from the prior year. This increasing concentration underlines the growing importance of scale and operational efficiency in the UAE market. Hatim Maskawala, managing director of Badri Management Consultancy, said there has been pressure on insurance companies for not meeting solvency requirements, as some companies recently announced increases in capital. 'Looking ahead, gradual rate improvements coupled with the Central Bank of the UAE's enhanced market oversight are expected to continue supporting technical margins and discouraging underpriced policies. However, insurers need to remain cautious of potential rises in reinsurance costs and deferred impacts of treaty renewals. With a greater proportion of profitability stemming from insurance services, the industry's long-term sustainability will increasingly depend on maintaining underwriting discipline and strengthening claims management practices,' added Maskawala. Some of the insurance companies that reported losses in their net insurance results managed to mitigate the impact through investment income. In total, six out of 26 companies reported negative insurance results. Of these, five still generated a net profit. Union Insurance Company announced a 76 per cent increase in net profit for the first half of 2025 compared to the same period last year, reaching Dh22.7 million, driven by excellent underwriting results, cost efficiencies, and an increase in investment revenue. Net underwriting results also increased by 93 per cent, reaching Dh11.07 million in H1 2025 compared to Dh5.7 million in the first half of 2024. The company's solvency reached 170 per cent in H1 2025, compared to 143 per cent reported for the year 2024 — exceeding regulatory requirements. Abu Dhabi National Insurance Company (Adnic) reported a net profit before tax of Dh261.2 million, an increase of 16.5 per cent year-on-year, driven by solid contributions across all core segments. It recorded gross written premiums of Dh5.539 billion, marking a 25.7 per cent year-on-year increase. Charalampos Mylonas, CEO of Adnic, attributed the strong results to disciplined cost management and forward-looking innovation initiatives, enabling the firm to adapt to evolving market conditions and seize new opportunities. The Dubai-listed Takaful provider Salama posted a net profit of Dh8.25 million during January–June 2025, driven by Dh7.86 million profit in Q2 2025 — a substantial increase from Dh2.95 million in Q2 2024. Takaful revenue was recorded at Dh515.36 million in the first six months of 2025, compared to Dh528.59 million in the same period of 2024.
Khaleej Times
20-05-2025
- Business
- Khaleej Times
UAE: Higher premiums, no rains benefit insurance sector as profits jump to 24%
The UAE insurers' net profit increased by Dh190 million or 24 per cent to Dh987 million in the first quarter of 2025 compared to Dh797 million in the same period last year, due to increased premiums and the absence of heavy rains, which hit the country early last year, according to Badri Management Consultancy. "The first quarter of 2025 has remained bright and sunny for the UAE insurance industry. There was an absence of rains, which impacted profits slightly in the first quarter and heavily in the second quarter of 2024," said Hatim Maskawala, managing director at Badri Management Consultancy The UAE recorded heavy rains in the second week of March last year as the country recorded about 6 months of rain over two days, prompting work from home and remote learning due to flooding. This impacted the insurers as businesses and the automobile sector were hit during the heavy downpour. Following record rains last year, the UAE insurers raised motor premiums to combat the rising costs of damages. It is estimated that around 100,000 vehicles were damaged during the record rains in March and April. "The absence of rains coupled with rising premium rates has led to insurance revenue growing by 21 per cent in the first three months of 2025, reaching Dh11.9 billion versus Dh9.8 billion in the same period last year," he said. Maskawala added that the growth is expected to continue, driven by rising premiums both for motor and medical, the key lines impacting the net. Data showed that insurance service results for the analysed listed companies experienced a 70 per cent increase from Dh447 million to Dh762 million. The leading five companies recorded a 43 per cent increase collectively, moving from Dh440 million to Dh629 million during the same period last year. "The increasing concentration of revenue and profit among leading companies reflects a changing market dynamic, where scale and efficiency are key to sustainability and expansion. Going forward, the industry must align premium growth with stronger underwriting and better claims controls to maintain long-term profitability," added Maskawala. CBUAE's regulatory actions have been key in enhancing market discipline and curbing the sale of underpriced policies by financially weak insurers. Still, the industry must stay alert to increasing reinsurance costs and the lagging financial effects tied to some treaty arrangements.
