For the week ended August 5, the DFM closed up 1.98% and the ADX was up 1.38%. The main winners were Ras Al Khaimah Ceramics (by 18.70%), National Takaful Company (15.12%), Al Mal REIT (14.02%), Ras Al Khaimah White Cement (11.63%), Methaq Takaful Insurance (10.15%) and Dubai National Insurance (10 percent).
Dubai Insurance Company, with a market capitalization of 750 million dirhams and a dividend yield of 4.67 percent, posted exceptional results for the second quarter. The company, which offers both life and damage insurance, has rebounded with the reopening of the economy.
During the second quarter, revenues jumped 111.4% to Dh96.2 million while net profit jumped 51.45% to Dh15.6 million. General insurance was the star, with portfolio growth of 189% to reach 63.6 million dirhams. As everyone knows, 2020 was a disaster for companies in the property and casualty insurance industry as economic activity had come to a standstill due to the lockdowns induced by the coronaviruses.
However, the resumption in this category which deals with fire, marine, automobile, accident and other miscellaneous non-life insurance is a good sign because it is an approximation of the general economy. The life insurance business also performed well, growing 79 percent to 25.3 million dirhams.
Overall, general insurance contributed 62 percent of turnover, while life insurance had a 25.30 percent share, with the remaining 12.70 percent provided by investments. . Nonetheless, it should be noted that the performance of the second quarter is not a one-off shock due to the normalization of the economy. Still, it appears that Dubai Insurance’s performance has not caught the attention of investors.
Best in history
The second quarter revenue was the largest it generated in its history. From 108 million Dh in 2010, it has now more than doubled to 263 million Dh in the last 12 months (TTM). The net profit also more than doubled during the period to reach 59.8 Dh on a TTM basis.
The company has no debts and holds 144 million dirhams of cash and cash equivalents on its books. These are sufficient for technology improvement plans.
The icing on the cake is the dividend policy, which shows an upward trend. It has issued cash dividends every year since 2011, and the dividend per share has increased from 0.25 Dh to 0.35 Dh currently. This shows superior management quality, as companies with good corporate governance practices regularly distribute profits to shareholders. Dubai Insurance, at its current price, offers excellent value as a perfect proxy to play normalizing the economy.