Financial Year 2012
Management Discussion & Analysis
Abu Dhabi National Insurance Company
Disclaimer
This conference call and associated
materials related to this call could contain
forward-looking statements about
Abu Dhabi National Insurance Company.
Such forward looking statements are based
upon the current belief and expectations of
ADNIC’s management and are subject to
risks and uncertainties, which could cause
actual results to differ from the forward
looking statements.
Any information that is set out in this call
should be considered in light of these risks.
2
Abu Dhabi National Insurance Company
Results Key Highlights
•
Profitable top-line growth of 11.4% in 2012, despite fierce competition and
evolving regulatory landscape
•
Competitive advantage through improved underwriting performance, strong
claims management, enhanced pricing, product suite & distribution
•
Strong investment growth with 16% increase in investment assets and 41%
increase in investment income
•
Further enhanced enterprise risk management at all levels of the business
•
Net profit of AED 145m and total comprehensive income of AED 202m
•
Robust liquidity position with cash at AED 1,145m covering 140% of net
insurance contract obligations to policyholders and partners
•
Strong capital base & attractive proposed dividend of AED 35 fils per share
Focused execution of Perpetual Excellence Plan to deliver targets
3
Abu Dhabi National Insurance Company
Strategic Priorities Achieved
Modernization:
• Upgrade and relocation of Deira Branch, Dubai
Branch Expansion:
• New regional hub established to service Abu Dhabi and the Western
Region
Corporate Realignment:
• Distinct divisions for Consumer and Commercial insurance services set
up to streamline services
• Key people recruited for roles in Investment Management and ADNIC’s
Special Investigations Unit (SIU) to further strengthen fraud
management initiatives
Technology:
• Continued investment in technology and process evolution
Quality Management:
• ISO 9000 certification achieved
4
Abu Dhabi National Insurance Company
Continued Shareholder Confidence in
Corporate Strategy
H.E. Khalaf
Al-Otaiba
10%
Abu Dhabi
Investment
Council
24%
Sheikh
Tahnoon AlNehayan
5%
Others
56%
Al-Dhabi
Investment
5%
5
Abu Dhabi National Insurance Company
Ratings Reaffirmed “A” Category
•
Reaffirmed by Leading Rating Agencies A.M. Best and Standard & Poor’s
A.M. BEST
Rating: A Excellent
Outlook: Stable
STANDARD & POOR’S
Rating : A Outlook: Positive
6
Abu Dhabi National Insurance Company
Product & Channel Expansion
Gross Written Premium
5YR CAGR: 14.1%
2012
2012
2011
Gross Written Premium
AED
2,299m
Reinsurance Premium Ceded
AED
Net Written Premium
2,066m
Premium Retention Ratio
7
2011
AED 2,299m
AED 2,066m
AED 986m
AED 933m
AED 1,313m
AED 1,133m
57.1%
54.8%
Abu Dhabi National Insurance Company
Consistent Growth Across Segments
2012
2011
2012
Non-Marine
Gross Written
Premium
Premium Retention
Ratio
2011
5 year CAGR
Marine & Aviation
Gross Written Premium
AEDm
AEDm Variance AEDm AEDm
Variance
1,797
1,611
11.6%
502
455
10.3%
68%
66%
2.6%
20%
16%
25.0%
Non-Marine
15%
Marine & Aviation
10%
2,500
2,000
1,500
1,000
AED
1,797m
AED
AED
1,611m
1,796m
Non Marine
Marine & Aviation
500
AED 502m
AED 455m
2012
2011
0
8
Abu Dhabi National Insurance Company
Robust Operating Performance
Net Underwriting Income
AED
299m*
Unearned
premium
reserve
AED20m
Net Technical Profit
AED
119m*
AED
275m
AED
35m
AED
116m*
Doubtful debt
provision
AED 15m
Unearned
premium reserve
AED 20m
AED
279m
Net
underwriting
AED
income
279m
including
proactive
measures
AED
275m
101
AED
64m
2012
AED
2012
2011
275m
KPIs
Net technical
profit including
proactive
measures
2011
2012
2011
Loss ratio
77.1%
73.4%
Loss ratio*
75.8%
73.4%
Expense ratio
17.8%
18.5%
Expense ratio*
14.6%
16.9%
Combined ratio
94.8%
89.3%
Combined ratio*
90.4%
87.8%
* Prior to proactive measures
9
Abu Dhabi National Insurance Company
Prudent Investment Strategy
INVESTMENT ASSETS (AEDm)
INVESTMENT INCOME (AEDm)
Net investment & Other Income
1,400
60
1,200
50
2012 = AED 2,503m [+16%]
2011 = AED 2,168m
1,000
2012 = AED 81.1m [+41%]
2011 = AED 57.5m
50
40
2012
2011
46
196%
800
30
600
20
127%
100%
20
400
10
200
0
0
-10
Deposit
Placements Investment Fair Value
and Cash
Properties through OCI
Balances
Amortized
Cost
Fair Value
through
Profit &
Loss
Investment
in JV
2012
1,145
589
528
219
22
-
2011
1,167
422
417
152
8
2
-2%
40%
27%
43%
162%
-100%
Growth
13
58%
-8%
10
10
4
1%
1
1
0
-4
-13
-20
Net interest Dividend Net Rental Net Other Gain/(Loss) Decrease in
income on Income
Income
Income
on
FV of Inv
bank
revaluation Properties
deposits
of FVTPL
and bonds
10
Abu Dhabi National Insurance Company
Net Profit
Net Profit
before
Proactive
Measures
200
173
2012A
Effect of
Proactive
Measures
• +AED 3m increase in Technical Profit, primarily due
to effective cost containment.
• +AED 24m increase in Investment Income.
• Earnings Per Share (EPS) of AED 0.53 compared to
AED 0.46 in 2011.
+27
2011A
+40
• Impairment of Receivables (AED 35m vs AED 15m).
• Proactive Implementation of UAE Insurance draft
regulation on Technical Reserves (AED 20m).
55
15
2012A
2011A
-13
Actual
Net Profit
• ADNIC Earnings Per Share (EPS) of AED 0.39
compared to AED 0.42 in 2011.
158
145
2012A
2011A
11
Abu Dhabi National Insurance Company
Total Comprehensive Income
250.0
AED
202.3m
200.0
150.0
AED
111.8m
2012
2011
100.0
50.0
0.0
2012
2011
12
Abu Dhabi National Insurance Company
Financial Strength and Capitalization
2500
Financial Strength
4500
AED
4,129m
4000
AED 2,090m
2000
AED
3,670m
AED 2,024m
AED 296m
AED 31m
AED 299m
1500
3500
2012
3000
2011
2500
2000
Strong Capitalization
AED
2,090m
AED
2,024m
12.5%
1500
1000
500
3.2%
1000
AED
1,200m
AED
1,200m
AED 188m
AED 188m
AED 375m
AED 375m
0
AED -37m
2012
500
0
2011
-500
Assets
Equity
Retained earnings
Investments revaluation reserve
General Reserve
Legal Reserve
Share Capital
13
Abu Dhabi National Insurance Company
Attractive Dividend Yield
2010
2011
Cash dividend as % of
nominal value
Dividend Yield
7%
6.5%
40%
35%
35%
35%
20%
15%
10%
5%
5.6%
5.0%
5%
30%
25%
Competitor 3
5.8%
6%
P
R
O
P
O
S
E
D
4.6%
4.4%
ADNIC
4.0%
3.9%
4%
3.6%
3.3%
3.7%
AD Insurance
Index
3.4%
3%
TBD
2.4%
2%
Bloomberg
GCC 200 Index
1%
Competitor 1
0%
0%
2012
ADNIC
4.3%
4.3%
2012
2011
2011
2010
2009
2008
Competitor 2
Source: Bloomberg
14
Abu Dhabi National Insurance Company
FY2012 Financial Highlights - Recap
2012
AED
2011
AED
Variance
2,299m
2,066m
11.4%
Net Profit
145m
158m
-8.5%
Net Profit before proactive measures
200m
173m
15.6%
Total Comprehensive Income
202m
112m
80.4%
Total Assets
4,129m
3,670m
12.5%
Capitalization
2,090m
2,024m
3.2%
Earnings Per Share (EPS)
0.39
0.42
-8.5%
EPS before proactive measures
0.53
0.46
15.2%
0.35 (proposed)
0.35
-
Gross Written Premium
Dividend Per Share
15
Abu Dhabi National Insurance Company
Community Commitment
•
ADNIC Yas Run: Title sponsor of the flagship ADNIC Yas Run. Donations
and sponsorship made to Operation Smile, an international children’s charity.
•
Absher: Proud supporter of the Absher Government initiative for
Emiratization. Our Emiratization increased to 10.8% from 8.7% in 2011, one of
the highest levels in the UAE insurance sector.
16
Abu Dhabi National Insurance Company
Strategic Priorities - 2013 and Beyond
We are focused on enhancing profitability through:
•
•
Execution of our regional expansion strategy
• Increasing our premium retention ratio prudently
Increasing our premium retention ratio prudently
•
Further strengthening enterprise risk management
• Optimizing operational efficiency through technology
17
Abu Dhabi National Insurance Company
Q&A
18
Abu Dhabi National Insurance Company
ADNIC Snapshot
•
Business mix
Key ShareholdersH.E.
(in % of 2012 reported financials)
ADIC
24%
Khalaf
Al-Otaiba
10%
Sheikh
Tahnoon
AlNehayan
5%
22%
Others
56%
Gross
Premium
Written
5%
78%
Marine and Aviation
27%
73%
•
•
•
•
•
•
•
Board of Directors
H.E. Khalifa Mohamed Al-Kindi, Chairman
Sheikh Mohammed Bin Saif Al-Nehayan,
Vice Chairman
Sheikh Theyab Bin Tahnoon Al-Nehayan
H.E. Ahmed Ali Al-Sayegh
Mr. Ghanem Ali Hamooda Al-Dhaheri
Mr. Sultan Rashid Al-Dhaheri
Mr. Mohammed Abdulazeez Al-Mehairi
Mr. Khalifa Sultan Ahmed Al-Suwaidi
Mr. Abdulla Bin Khalaf Al-Otaiba
Al-Dhabi
Investment
Net UW
Income
•
•
Non-Marine
Chief Executive Officer: Mr. Walid Sidani
2 Regional
Offices
5 Branches
10 Sales
and Service
Centers
479
Employees
19
Abu Dhabi National Insurance Company