For the year ended 31 December 2018
Chief Executive's Report
Continued growth in the Bahrain economy was witnessed over the past couple of quarters. The business sentiment continued to be positive, largely owing to political stability and some reforms starting to come through. The financial services sector was a good beneficiary of these positive developments. Increasing awareness about the benefits of insurance across the general population, along with increasing the penetration of general insurance in the country had provided good support for the Insurance market. Amid rising awareness, growing population of young working individuals and the Bahraini insurance sector is estimated to continue growing further. Increasing levels of digitisation are benefitting the sector in multiple ways; easy on-boarding of new customers and improving customer experience and convenience. Additionally, increasing adoption of technology across the operations of insurance companies is driving efficiencies, leading to higher value creation for all stakeholders. Going forward, customer centricity will continue to be a key differentiator for the insurance companies.
Although the investments showed some positive signs, weak investment appetite, partly emanating from a leveraged corporate sector alongside a stressed banking sector, remained a challenge. At a time when the global economy seems poised for a turnaround after years of sluggish growth, we hope the investment cycle turns better and builds on the improving macro parameters.
Bahrain and other GCC countries continued to see some improvements in macroeconomic conditions during the year. Several structural reforms were initiated by the Government that are expected to provide an impetus to long-term sustainable growth in the economy. Many business sectors have been under economic stress in the last couple of years on account of several global, regional and economical situations. There were challenges in terms of slowdown in nominal growth in some sectors due to the impact of muted global commodity prices on some important sector and subdued private investments.
The year 2018 was another year of challenges and opportunities for Takaful International. Although a tough year Takaful International could maintain and grow its business. Takaful wrote a Gross Written Contributions of BHD22.0 M during 2018 compared to previous year of BD19.6 M. The company was cautious in its underwriting policy and restructured further its business portfolio in line with its strategy to maintain a balanced portfolio, adopting prudent underwriting policies to protect the interest of its stakeholders. The overall net claims ratio was 74% for the year 2018 compared to 73% for year ended 2017.
Our organisational aim is to meet the savings, wealth accumulation, health and protection needs of the fast growing and increasingly affluent residents of Bahrain. The continued success of Takaful International is a testament to the strength of the long-standing trust of our customers and various stakeholders. This has been underpinned by our shared commitment to providing quality products to our customers, delivering value to our shareholders, and contributing to the development of the economy.
The performance delivered by our Company over the years is an outcome of our efforts to provide a superior experience to our customers. It is our constant endeavour to understand the customers’ changing preferences and to improve their experience at every stage. Simplification and transparency of products, services and processes enables us to create value for our customers, right from on-boarding to claim settlement. We believe that removal of complexity from our business is instrumental in driving all-round value creation for all stakeholders. Our technology and digital offerings are aimed at providing a seamless transacting experience to our customers. The Company’s persistency ratio reiterates the trust and support that customers have reposed in us. Takaful International embodies the two words of trust and transparency. We believe that trust is dependent on our ability to design simple and easy to understand products, while transparency is reflected in the long-term value delivered by our products and services.
Our ability to continuously deliver value to our customers is the outcome of the dedicated efforts put in by our people. They value their association with the Company and believe in the growth potential of the sector. Our team is agile and has the humility and sensitivity to keep adapting to the changing preferences of our customers. This approach drives our Company to achieve greater heights in the dynamic ecosystem that we operate in. Overall, we will continue to offer simple products which are relevant to society and simultaneously drive efficiencies across the organisation.
Takaful International was successful in maintaining and growing its business despite challenging business environment. The company adopted prudent underwriting and best practice policies for preserving resources and savings in the cost thereby successful in have a successful year registering decent overall profit of BD 846K for the year ended 2018 compared to loss of BD 772K in the previous year.
Bahrain’s insurance sector has evolved over the last decade. A competitive market and regulatory initiatives focused on high quality products that meet the needs of the customers have laid the foundation for future growth. These factors enhance Takaful’s prospects to tap the available potentials in the market. We have built a business model based on a competitive product proposition, quality customer service and a good distribution network. With the use of technology and a committed team of employees, we strive to be the preferred choice of customers for their protection and savings needs. We accord the highest importance to honouring the trust that our customers have reposed in us, not only for themselves but also for their families. We are therefore committed to ensuring that we are responsive to customer needs.
Takaful International’s focus remains on supporting delivery of elements of value to customers. The company’s array of products continues to fulfil customer specific protection and financial goals, in a cost-effective manner. The Company has consistently focused on its differentiator – a customer-centric value proposition. At the same time, it has adopted a strategy to follow a segmented approach with an emphasis on more profitable product lines. Our customer-focussed approach encompasses products, distribution, customer service and claims settlement activities designed to provide a superior experience to our customers.
Our strategy has been that of offering convenience to customers. To render this strategy in action we developed an array of products relevant to customers’ needs to provide a delightful on-boarding experience and to deliver superior service to customers.
The Company has consistently focused on its differentiator – a customer-centric value proposition. At the same time, it has adopted a strategy to follow a segmented approach with an emphasis on more profitable product lines.
Our strength is in growing and managing high quality, multi-distribution channel, together with our expertise in providing innovative solutions to our customers’ savings and protection needs and delivering service excellence.
All these helped your company to leverage opportunities and to maintain its leadership position in Bahrain’s Takaful business. We are thankful to all our stakeholders for their support extended in making us their preferred Insurance provider.
Overall management, general and administrative expenses for year 2018 which amounted to BHD2.507M was lower than previous year BHD3.136M.
Takaful has endeavored to maintain the expectations of its shareholders, policyholders and other stakeholders. Nurturing long-term relationships and best services have always been the highest priority of Takaful. Since inception, Takaful has believed in building a culture of integrity and transparency and endeavored to revolve all its business activities based on its founding principles of fairness, kindness, efficiency and effectiveness based on the Islamic Insurance, cooperative sharing and caring principles.
Our Board of Directors believe in upholding the highest standards of governance and accountability. The board has taken cognizance of various regulatory changes in the overall governance framework and remains committed to imbibing the spirit of the law and regulations.
We expect a positive outlook for the year 2018 and expect a decent growth in business. Our main focus will be on quality services, prudent claims & expenses management expenses which will help the company to generate better results.
I would like to take this opportunity to thank our Board of directors for their support and guidance. I would also like to express my appreciation to the employees of Takaful International for their dedicated efforts towards achieving the goals of the company. Also thank our valued clients, reinsurance companies, Sharia’a board members, intermediaries and all our business partners for their support which has contributed in the growth of the company.
Congratulations to the team on achieving a year of strong financial performance and continuing to execute on its strategy to capture long-term growth opportunities in the insurance market.
We would like to thank all our stakeholders for their continued trust and support extended to us. We will continue to build our business by adhering to our strong culture of trust and transparency and prudent risk management.
Essam Al Ansari
Bahrain, 13th February 2019
Essam Al Ansari