Mashreq’s income gets boost being parent company
DUBAI: The AED54.13 million net profit earned by Oman Insurance Company (OIC) for the second quarter ending June 30, 2020, has given a much-needed leg-up to the bottom line of Mashreq(bank) that owns 63.94 per cent of the insurance arm.
While Mashreq had a weak second quarter with a net profit of just AED85 million, a big portion of that profit must have come from Oman Insurance to the extent of 63.94 per cent of its profit, which works out to AED35 million as the subsidiary’s contribution to the parent company by using the equity method.
While Oman Insurance reported AED54.126 million for the second quarter (Q2) – the three-month period ending June 30, 2020, the comparable profit for the same period last year was AED50.49 million.
Mashreqbank is the largest shareholder in Oman Insurance with 63.94 per cent stake. For the first half of FY20, Oman Insurance reported net profit to the tune of AED110.202 million compared with AED105.633 million for the same period in the previous year.
Importantly, this shows that Oman Insurance improved its earnings during the COVID period against all odds. Insurance experts state that most companies may have witnessed a lower claim ratio during the quarter in motor insurance, the largest portfolio with most companies.
While the gross insurance premium earned by Oman Insurance during the quarter under review was AED1.039 billion, that for the previous comparable period was at AED970.714 million.
The gross claims settled during the said quarter amounted to AED529.86 million, a tad lower than the previous comparable period – at AED582.140 million.
However, the reinsurance commission income, which is an important component of the insurance companies’ earnings in the UAE, for the Q2 of the current financial year at AED45.169 million was about 32 per cent lower compared with that of the same period last year at AED66.347 million.
Likewise, the investment income for the second quarter in the current year at AED25.801 million was lower than the same period in previous year at AED29.459 million.
The company generated an underwriting income of AED103.692 million during the period under review against AED108.138 million the company turned in for the comparable period last year.
The total assets during the year increased from AED7.518 billion from AED7.018 billion, representing a growth of 7.13 per cent.