Arab Insurance Group (Arig) saw net profit slump in the first quarter of the year as volatility in global financial markets took its toll.

It earned a net profit of $3 million compared to $7.6 million for the same period last year.

The performance of the company's core reinsurance business was better than expected but the volatility of the global financial markets during the first three months of the year depressed investment income.

The combined effects generated a first quarter underwriting result of $1m for Arig against $3.7 million last time.

Arig's reinsurance portfolio grew by 41 per cent year-on-year with gross written premium accounting for $130.7 million up from $93 million.

Life, medical lines and the dynamics experienced within the existing portfolio were key drivers of growth.

Investment earnings were down in tandem with the decline in global financial markets. However, negative impact was contained by Arig's lower allocation to equities and the stop loss protection the company has in place.

Other offsetting factors include increased earnings from cash and short-term maturities as the company maintained higher cash positions during the first quarter.

'The trends and results seen in our reinsurance book are testimony to Arig's strong position in a highly-competitive market place,' said chief executive officer Yassir Albaharna.

'We believe we have made the right moves in time to shield the company against the effects of what increasingly looks like a buyer's market.

'Current performance in the investment portfolio is part and parcel of the kind of market volatility experienced from time to time. We are confident that markets should eventually recover.'

Shareholder's equity stood at $281.9 million and the book value per share was $1.33 at the end of the quarter.-TradeArabia News Service