UAE insurers' profits drop in Q2 due to April 16 rain impact, low investment income

The UAE insurers’ profit after tax fell Dh118.4 million or 29.5 per cent in the second quarter of 2024 to Dh282.8 million compared to Dh401.1 million for the same period last year. This was hit mainly by a drop in investment income and the impact of higher claims in the wake of unprecedented rains in April, according to the latest figures released by Badri Management Consultancy.

Investment income fell Dh130.8 million or 30 per cent to Dh307.7 million during the April-June 2024 quarter as against Dh438.5 million during the same period last year.

The UAE-listed insurance firms’ profits before tax dropped Dh94 million or 22.6 per cent to Dh322.2 million in Q2 2024.

Stay up to date with the latest news. Follow KT on WhatsApp Channels.

The insurers didn’t disclose the impact of April 16 rains in terms of value during their quarterly report. However, most of the insurers emphasised on the serious impact rain claims had in the last quarter.

“The unprecedented April rains event which the UAE had not witnessed in more than 75 years was a watershed moment for the insurance industry. We managed to absorb most of the impacts of the resulting one-off large claims during the first half, without compromising our overall profitability due to the stronger than budgeted performance of other Takaful business lines as well as our robust risk mitigation framework,” Dr Ali Saeed Bin Harmal Aldhaheri, chairman of Watania International Holding, said in the quarterly statement.

Industry executives earlier projected that UAE insurers would see around a 25 per cent drop in profits in the second quarter due to the rains.

Hatim Maskawala, managing director at Badri Management Consultancy, said profit before tax increased from Dh975 million in the first half of 2023 to Dh1.044 billion in H1 2024, reflecting a growth of 7 per cent.

“Out of the growth of Dh69 million, Dh64 million growth is due to investment income. This means insurance activities have seen a marginal increase. This marginal increase is quite unexpected as the insurance industry suffered heavily due to the rains mainly in April (there were other days of losses in February, March and May). A few companies have mentioned in their financial statements that the profits are subdued due to rain losses and only a handful of companies have shown a drop in profits or losses,” Maskawala told Khaleej Times.

• Record rains in UAE: Two months on, car insurance claims continue to be filed