Abu Dhabi National Takaful first-quarter profit falls 42%, anticipates ‘significantly higher losses’ in medical line
Abu Dhabi National Takaful’s profit for the first three months of the year slumped by 42% to 15.55 million dirhams compared to 26.8 million dirhams for the same quarter in 2019.
Abu Dhabi’s oldest takaful operator said in a bourse filing on Thursday (May 14) that consumer behaviour has shifted due to the current economic uncertainties.
“In light of the prevailing circumstances of drop in oil prices along with lockdown due to COVID-19, we have been witnessing a shift in consumer behaviour at an increasing pace where demand for luxury products with high profit margins such as life insurance, high value vehicles cover, specialty covers, enhanced medical and general insurance protections is shifting towards mandatory and basic coverages that are usually price sensitive with lower margins,” said the company.
However, it said it has not experienced any significant impact on its claims related to COVID-19.
“Since the observed impact of the pandemic has not yet crossed the thresholds set in the existing stress testing scenarios, no change has been made to our products assumptions as yet,” said the Islamic insurer.
“However, on the reserving side, we are anticipating significantly higher losses in Medical line and lower losses in Motor line of business (this is supported by current claims data) and our reserving assumptions have been adjusted accordingly.”
The insurer’s net written contributions dropped and net paid claims went up.
Total gross takaful contributions written during the three months to March 31 reached 123.1 million dirhams, a rise of 6.76% year-on-year. But net written contributions dropped by 33.9% to 46.46 million dirhams versus 70.3 million dirhams for the same period in 2019.
On the claims side, gross claims paid reached 47.4 million dirhams compared to 41.52 million dirhams year-on-year. Net paid claims stood at 16.22 million dirhams, up by 32.32% from the same quarter last year.
Net investment and other income plunged by 52.38% year-on-year to 4 million dirhams, reported the insurer.
The company’s investments include 117.2 million dirhams invested in securities outside the UAE, it said.
The Islamic insurer’s assets fell by 1.71% to 1.21 billion dirhams.
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