Truth: Assets of Cooperative Insurance Companies Represent 4% of the General Insurance Companies’ Assets

Truth: Assets of Cooperative Insurance Companies Represent 4% of the General Insurance Companies’ Assets

A Study Calling for Establishing An Association for Cooperative Insurance in the State
Date: 12 May, 2015
Source: Abeer Abd-El-Halim – Abu Dhabi
An economic study called for establishing an association and union for cooperative insurance, that all the cooperative-insurance companies will access its membership, to talk on their behalf and strengthen their viewpoints submitted before the Insurance Authority.
The study, made by Truth Economic Consultancy Company titled “General Insurances and Cooperative Insurance of 2013-2014”, recommended preparation of continuous and ongoing series of researches and studies by the cooperative insurance association about the cooperative insurance developments. The study also recommended reviewing the best world practices in this respect and adjusting them to be fit for the country in accordance with the legislations and laws applicable in this sector as well as organizing annual regional and international conference on the ways of developing this type of industry.
The GM of Truth Economic Consultancy Company, Reda Mosallam, said that “the study shows that the cooperative insurance sector in the state is at the very beginning and needs more consideration and support by a series of legislations that strengthen this type of insurances and increase its scope in the insurance market in the country.”
Mosallam indicated the necessity of exerting more efforts by cooperative insurance companies to increase their scope in the insurance market.

Revenues and Investments
The study indicated that the total assets of cooperative insurance companies do not exceed a percentage ranging between 3 and 4% of the general insurance companies’ total assets during 2013 and 2014. The investments of the cooperative insurance sector are ranging between 2 and 2.6% of the total investments in the insurance sector during the two years of comparison. The capital paid up to the cooperative insurance companies ranges between 8.2 and 9% of the total capital in the sector.
The study hinted that the total revenues of the cooperative insurance companies reached around AED 787m in 2014 compared to around AED 546.3m in 2013. This represents an increase of AED 240.7m at 35 %.
The percentage of the revenues yielded from the cooperative insurance companies reached about 17% of the total revenues of “general insurance” for the fiscal year 2013, compared to 35% for the fiscal year 2014 with 18% rise.
As for the value, the revenues of “general insurance” companies reached about AED 2.3bn in 2014 compared to AED 3.2bn in 2013, with a decrease of AED 912m at 28.7%. According to the study, this is due to the rise in cooperative insurance revenues and the decline in “general insurance” revenues by AED 912m.

Expenses and Profits
The study showed that the total annual expenses of cooperative insurance companies reached about AED 710.6m in 2014 compared to AED 474.2m in 2013, with a rise nearly AED 236.6m. Hence, the total expenses of cooperative insurance companies reached about 33% of the total expenses of “general insurance” for the fiscal year 2013. This percentage increased to reach about 72% for the fiscal year 2014.

The study showed that the net annual profits of cooperative insurance companies climbed to about AED 76.4m for the fiscal year 2014 compared to around AED 72.1m for the fiscal year 2013 with an increase of around AED 4.3m at 6%.

The net profits of cooperative insurance companies represented a percentage nearly 4% only of “general insurance” companies’ profits for the fiscal year 2013. This percentage increased to reach in the fiscal year 2014 about 6%.
As for the value, the net profits of the “general insurance” companies for the fiscal year 2013 reached about AED 1.7bn and dropped to nearly AED 1.3bn for the fiscal year 2014.

Total Assets
The total assets of the cooperative insurance companies, according to the study, reached about AED 1.9bn for the fiscal year 2014 compared to about AED 1,7bn for the fiscal year 2013. Accordingly, the total assets of the cooperative insurance companies reached 3.6% of the total assets of “general insurance” companies for the fiscal year 2013, and declined to 3.5% for the fiscal year 2014.
The “general insurance” companies’ assets for the fiscal year 2013 reached about AED 45.6bn and increased in the fiscal year 2014 to reach about AED 53.6bn, with an increase of AED 8bn at 18%.

Rights of Stockholders
The study said that the total rights of stockholders of cooperative insurance companies reached about AED 757m for the fiscal year 2014 compared to about AED 738m in 2013, with an increase of 3%. Accordingly, the percentage of the rights of stockholders of cooperative insurance companies to the rights of stockholders of “general insurance” companies for the fiscal year 2013 was 4%. This percentage declined in the fiscal year 2014 to reach 3.8%.
The total rights of stockholders of “general insurance” companies in the fiscal year 2014 reached about AED 20bn compared to about AED 17.5bn in the fiscal year 2013, with an increase of AED 2.4bn at 14%.

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