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UAE: Islamic insurance firm records Dh7.9-million profit despite April rains

Five weeks after the unprecedented weather event, Watania Takaful registered 100 per cent of the claims and most were processed within 50 per cent of the usual timeframe with zero motor claims rejected

Shariah-compliant insurer Watania International Holding (WIH) swung back into black in the first half of 2024, posting a Dh7.9-million net profit — compared to a Dh3.9-million loss during the same period last year — despite the impact of unprecedented rains recorded on April 16.

“The unprecedented April rains event, which the UAE had not witnessed in more than 75 years, was a watershed moment for the insurance industry. Pleasingly, we managed to absorb most of the impact 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,” said Dr Ali Saeed Bin Harmal Aldhaheri, chairman of WIH.

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In 2020, Dar Al Takaful acquired Noor Takaful and in July 2022, the National Takaful Company (Watania) merged with Dar Al Takaful to create one of the largest Takaful entities in the UAE. In March 2023, the name of the holding company, Dar Al Takaful, was changed to Watania International Holding and its insurance licence was cancelled as it became an investment holding company that aims to expand its footprint through Sharia-compliant investments in the Takaful and Islamic finance sectors.

WIH and other industry players recorded major increases in claims after the rains in April, especially in the motor and property lines.

Takaful revenues dropped to Dh389 million during January-June 2024 as against Dh457 million during the same period last year, down nearly 15 per cent.

'Operational profits remained on track'

Aldhaheri said they remain cautiously optimistic about the remainder of the financial year primarily due to the continued improvements of the financial and operational performance and more stable balance sheet.

“The business turnaround we achieved towards the end of 2023 led to a stronger balance sheet underpinned by ongoing improvements in the financial and operational performance of our Watania Takaful subsidiaries. The implementation of sustainable operational and underwriting improvements enabled us to support our customers better and faster in the aftermath of the April heavy rains. In the following five weeks, Watania Takaful registered 100 per cent of the claims submitted by customers and most were processed within 50 per cent of the usual timeframe with zero motor claims rejected at that time,” said Gautam Datta, CEO of WIH.

“Our operational profits remained on track despite the anticipated significant impact of the one-time claims related to the extreme weather event, particularly on the motor and technical business lines. This was mostly offset by the ongoing improved performance of the Medical and group Family (life) Takaful segments, combined with disciplined underwriting practices and better pricing specifically following the rains. Despite the challenging market and sector conditions, our net profit for the first half continued to grow driven by higher underwriting earnings across several Takaful business lines” he said.

Datta expects the outlook for the rest of the financial year to be positive.

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