The UAE insurers' profit after tax declined by Dh118.4 million, or 29.5 percent, in the second quarter of 2024, reaching Dh282.8 million compared to Dh401.1 million in the same period last year. This decrease was primarily due to a reduction in investment income and the effects of increased claims following the exceptional rains in April, as reported by Badri Management Consultancy. Investment income dropped by Dh130.8 million, or 30 percent, to Dh307.7 million during the April-June 2024 period, down from Dh438.5 million in the previous year. Profits before tax for UAE-listed insurance firms also fell by Dh94 million, or 22.6 percent, to Dh322.2 million in Q2 2024.
The insurers did not specify the financial impact of the April 16 rains in their quarterly reports. However, they highlighted the significant effect of rain-related claims in the last quarter. Dr. Ali Saeed Bin Harmal Aldhaheri, chairman of Watania International Holding, noted in the quarterly statement that the unprecedented April rains, which the UAE had not experienced in over 75 years, were a critical event for the insurance industry. Despite the large one-off claims resulting from the rains, the company managed to maintain its profitability due to the strong performance of other Takaful business lines and its effective risk mitigation strategies.
Industry forecasts earlier suggested a 25 percent drop in profits for UAE insurers in the second quarter due to the rains. Hatim Maskawala, managing director at Badri Management Consultancy, reported that profit before tax rose from Dh975 million in the first half of 2023 to Dh1.044 billion in H1 2024, a 7 percent increase. Of this growth, Dh64 million was attributed to investment income, indicating a slight increase in insurance activities. This marginal increase was unexpected given the industry's significant losses due to the rains, particularly in April. A few companies noted in their financial statements that profits were lower due to rain-related losses, with only a few showing a decrease in profits or reporting losses.
The heavy rains in mid-April led to a substantial increase in motor and property claims in the second quarter. Maskawala described this event as one for which insurers were not well-prepared, causing significant losses. The impact was widespread, affecting operational areas as many claims were filed simultaneously. Badri Management Consultancy noted that out of around 28 listed UAE insurers, nine had solvency levels below 100 percent, and about six were in the 150 percent range or lower. Maskawala anticipates higher earnings in the second half of the year due to rate increases, hoping for no further damaging rains or events.
