Dear Shareholders,
On behalf of the Board of Directors of Oman United Insurance
Company SAOG, I have the pleasure to present to you the 22nd
annual report including the Financial Statements of the
company and Auditors Report for the financial year ended 31st
December 2007, along with the Management Discussion & Analysis
Report and the Corporate Governance Report.
DOMESTIC ECONOMY
With strong economic growth boosted by rising energy prices,
Oman’s Gross Domestic Product (GDP) grew by 11.6% in 2007,
riding on the back of the far better than expected in oil
prices, strong demand and improvement in non-oil exports. Oman
Equity Market has also recorded yet another successful year.
The benchmark MSM30 index closed with awesome gain of 61.8%
making the best performance market in the region. We expect
the rapid economic growth fuelled by the Government Strategy
to diversify the source of income through and the witnessing
mega infrastructure projects to shape the destiny of Oman’s
economy in the coming years.
LOCAL INSURANCE MARKET
The local market has been witnessing entry of new players and
with the increasing number of insurance companies operating in
Oman, we expect the cut-throat competition to be more severe,
this will mean a softening of premium rates thereby putting a
strain on Underwriting results and Reinsurer relationships. As
a result more pressure will be put on management to maximize
the company’s market share. Nevertheless, OUIC will maintain
its conservative approach to Underwriting with a view to
providing quality service to all our policyholders for the
long-term.
Based on the statistical annual report issued by CMA for the
year 2006, your company has market share of 14.5% of the
overall Omani Market. However, business wise OUIC considered
the second largest Company in Omani Insurance Market.
INCOME & TECHNICAL RESULTS
Despite, the continuing severe pricing competition and the
intromission new players to the local insurance market, your
company was able to achieve a growth of 25%, in premium income
versus 2006. The gross written premium for the year 2007 ,
amounted to RO.26.1 million versus RO.20.9 million in the
previous year .
The underwriting profits of Medical and life business
registered an outstanding Y-O-Y growth of 376 %. The gross
underwriting profit for Medical and life business, stood at
RO. 2.6 million versus RO. 546 K in 2006.
As for as general insurance business, an unexpected large
number of claims incurred due to the unusual weather
conditions which the Sultanate has exposed in June 2007, this
has adversely affected the company’s underwriting results.
Therefore, the net underwriting losses for general business
amounted to RO. 2.6 million as against profit of RO.2.6
million for the corresponding period. Consequently our gross
underwriting profit for Insurance and Auto Services amounted
to RO. 298K versus a Profit of RO.3.5 million in 2006.
Auto Service Division
The division continues to improve and has achieved a gross
operating profit of RO. 323K for the year 2007, versus RO.
297K in the corresponding period of the previous year
registering a growth of 9%.
INVESTMENTS
The net investment portfolio amounted to RO. 42.8 million as
against RO. 30.7 million in 2006, registering a growth of 39.4
%, during the year 2007. As far as the performance of
investment portfolio and due to the out performance of Muscat
Securities Market (MSM), coupled with remarkable rise in
market value of some of overseas investments, the contribution
of investment income to bottom-line results was very
significant when compared to the income of the previous year.
The net investment income for the year 2007, amounted to RO.
6.6 million as against RO. 491K in 2006 registering an
outstanding growth of 1,242%.
It is also worth mentioning that based on the evaluation of an
independent professionally qualified valuer, the fair value of
the company’s investment properties estimated at RO. 5.6
million as against 4.28 million in the previous year . The
unrealized profit gains resultant from evaluation is not
included in profit and loss account, and been referred to in
the note (15 –A) of financials.
BOTTOM-LINE RESULTS
To this effect, the Company achieved a net profit after tax of
RO.4.2 million for the year 2007 as against RO. 1.6 million
for the previous year with a growth of 162.5%. Accordingly,
the earning per share (EPS) amounted to 42 Baizas on a capital
of RO. 10 million as against 19 Baizas which was based on a
capital of RO.8 million in 2006.
DIVIDEND DISTRIBUTION POLICY
The company’s policy in dividend distribution is based on
maintaining a fine balance by retaining and distributing
annual profits whilst taking into consideration the future
growth of the company and the possible economical and
financial market volatility. Considering the foregoing , I am
pleased to inform you that the Board of Directors recommends a
cash dividend of 20%, based on outstanding number of shares of
100 million as at 31st December 2007.
It is worth mentioning that the legal reserve has already
reached the legal limit of one third of the increased capital.
As a result, there is no more appropriations from the profit
of 2007 onwards (unless we increase the capital further).
The statement below shows the Dividend distributed for the
last Five years:
|
Year Dividend |
2003 |
2004 |
2005 |
2006 |
2007 |
Total |
|
Cash % |
10.000% |
10.000% |
10.000% |
15.000% |
20.000% |
65.000% |
|
Stock % |
20.320% |
15.000% |
15.940% |
0.8004% |
- |
52.0604% |
|
Total % |
30.320% |
25.000% |
25.940% |
15.8004% |
20.000% |
117.0604% |
CORPORATE GOVERNANCE REPORT
With regard to the provisions laid down by the Code of
Corporate Governance for Joint Public Companies issued by
Circular No.11/2002 of Capital Market Authority amended by
Circular No. 1/2003, and Code of Corporate Governance for
Insurance Companies issued by Circular No. 7/T/2005, the Board
of Directors has reviewed the internal control systems and its
adequacy during the year. The Corporate Governance Report is
incorporated within the Annual Report after it has been
audited by the Auditors.
DONATIONS
Dear Shareholders, Conscious of its social and national
responsibilities, the Board decided a direct donation of RO.
50,000 to the victims of the unexpected natural disaster.
OUTLOOK VISION & EXPANSION PLAN
Dear Shareholders, in order to maintain the growth in premium
income and to mitigate the impact of severe competition, the
Board decided to expand the company’s operations outside the
country. Accordingly and after obtaining the CMA’s approval, a
feasibility study was conducted to set up a new Omani-Qatari
Co-ownership insurance company in Qatar State with paid-up
capital of US$10 million. The management is in the process to
complete the formalities of registration and expected to start
operation during current year.
OMANISATION
We are pleased to announce that, presently most of the leading
positions in the company are occupied by Omanis. The
Omanization percentage of insurance activity reached to 63.1%,
which exceeds the limit laid down by the Government. The
overall Omanization percentage after adding the Auto service
division which has more expatriates stood at 52%.
ACKNOWLEDGEMENTS
On behalf of the Board, I wish to thank the shareholders for
their unstinting support. As usual our thanks are also
extended to our customers for their patronage and confidence
they have reposed in the company. We also thank the management
of the company and the staff for their loyalty, due diligence
and efforts to achieve these results. Our thanks are also
extended to reinsures for their full support and cooperation.
Our special thanks and appreciation to All governmental
entities with special thanks to Capital Market Authority for
their tremendous support and assistance which has led to the
smooth functioning of our operations.
Finally, our sincere thanks and gratitude to His Majesty
Sultan Qaboos Bin Said for his wise leadership and we all pray
to Almighty Allah to shower him with blessings and keep him in
good health and give him long life .
Wishing you all the best,
SALIM BIN NASSIR AL -BUSAIDI
CHAIRMAN
February, 2008
|
