Listed insurance companies in the UAE reported a surge in aggregate profits in 2017, as the regulatory changes introduced over the last three years helped push up prices, said Moody’s in a new report.

 "For many insurers the profitability improvement in 2017 has brought respite from steady capital depletion that was driven by bottom-line losses in previous years," said Mohammed Londe, an assistant vice president at Moody's.

 "We expect UAE insurers to maintain prices at their current higher level in 2018," said Londe. "The higher prices, combined with the improvement of underwriting controls as part of a regulatory driven enhancement to risk management, will support profitability."

Key points:

•    Aggregate profit of the UAE's 29 listed insurers rose 46 per cent to Dh1.31 billion ($0.36 billion) in 2017, from Dh0.9 billion ($0.25 billion) in 2016.

•    A sustained improvement in profitability would also help the market regenerate capital over the medium to long term, which Moody’s considers a credit positive.

•    The upturn in underwriting results reflects an increase in insurance prices due to the introduction of actuarial reserving in 2015, as well as the implementation in 2017 of a "unified motor policy," in the UAE that introduced revised minimum prices and provided standardized coverage for policyholders.

•    The listed UAE insurers' weighted average loss ratio improved to 64 per cent in the first nine months of 2017, compared with 71 per cent and 82 per cent in 2016 and 2015 respectively.

•    This drove a substantial improvement in underwriting profitability, with reported combined ratio, a measure of profitability for insurers, improving to 91 per cent for the first nine months of 2017, from 99 per cent and 105 per cent in 2016 and 2015 respectively.

•    The increased interest from investors will also improve the UAE insurers' financial flexibility, equipping them to participate in market consolidation.

•    Merger and acquisition activity has previously been on hold in the region because of the weak underwriting performance of some players in the sector. – TradeArabia News Service