Detailed analysis of the accumulated losses

Date:

12 August 2022

Period of Financial Statements

Year 2022

Accumulated losses:

AED 383,864,000

Accumulated losses to capital ratio

31.70%

Main reasons leading

These losses were accumulated over several previous years due to

to these accumulated

significant losses in 2012-2013 and 2015-2016, totaling AED 843m

losses and their

primarily from the

loss-making UAE motor business

and Best Re

history:

incurred losses.

Thailand Floods and other reinsured losses in 2012 caused significant

technical losses in subsidiary Best Re (Best Re sale was concluded by

SALAMA in 2019). According to reports, these floods were the worst in

last five decades with economic loss of USD 45.7 billion (AED 168

billion) and hence it is considered as one of the top five costliest

natural disasters in modern history.

The other area that has contributed to losses was Motor business in

the UAE which by its very nature is highly competitive and volatile. In

2015 the motor insurance business faced many challenges leading to

losses for many operators in the UAE market.

From 2017, the company managed to turn around its operating

performance and constantly reporting net profits. SALAMA reported

net profit of AED 27.5m in 2017, AED 2.0m in year 2018, AED 55m in

year 2019, AED 149m year 2020, AED 40.05m year 2021 and 12.18m in

H1 2022.

Measures to be taken

The Board appointed in beginning of year 2019 has implementing a

to address

three-pronged strategy to improve the core business

profitability,

accumulated losses:

enhance the investment income, and implement superior corporate

governance standards. There has been considerable improvement in

underwriting profitability of SALAMA in 2019 due to focus on the

quality of risk underwritten by the Company simultaneously

maintaining growth in total gross written contribution. The investment

portfolio is moving towards assets with low volatility and better risk

adjusted returns. It

is expected that the Company will continue to

deliver on its profitability objective.