Bahrain Kuwait Insurance Company (BKIC) is open to mergers and acquisitions to expand its brand footprint across the GCC region, the company's chief executive has said.

Ebrahim Al Rayes told the Gulf Daily News (GDN), our sister publication, that the company was focusing on information and communications technology as the key differentiator from its competitors.

BKIC launched a new website for online selling of personal lines products last year and would start offering online renewal of motor insurance this year.

"We are planning to launch mobile apps for our online presence also soon," he said on the sidelines of the company's Annual General Meeting (AGM) at the company's headquarters in Seef yesterday (March 8).

On the outlook for the current year, Al Rayes said falling oil prices are expected to throw various challenges to insurance companies given the fact that oil sector is the major driver of the economy.

"We expect governments may exercise more pressure on controlling of expenses and revenue spending. They may reduce the spending budget of service industries and postpone some projects. This will increase competition and increase in prices. We hope that the private sector will play a bigger role in activating the economy," he added.

The meeting saw shareholder approval for cash dividend of 35 per cent of the paid up capital, amounting to BD2.5 million ($6.5 million).

Earlier, BKIC chairman Murad Ali Murad told shareholders that the gross premium of Bahrain insurance market has been increasing steadily over the last three years at an average rate of about eight per cent per annum.

"On the other hand, underwriting profit has been showing a proportional decline during the period," he said.

This was primarily due to steep increase in loss ratio in motor and medical classes of business, which together constitute 42 per cent of the total market premium.

"Intense competitive pressure on premium rates, and increasing volume of claims have been the primary cause for this situation," Murad said.

According to him, property insurance portfolio, which constitutes about 18pc of the total volume, operates on very thin margins.

Low retention capacity of the market implies outflow of profitable premium at nominal commission terms which barely allow insurers to meet their costs of operation, he said.

However, BKIC continued its concentration on profitable lines of business and has been able to achieve a four per cent growth in premium income despite severe competition.

Murad said the company's board has approved the "Financial and Administrative Authority matrix" which covers all aspects of the company's operations as well as the whistleblower policy.

The board has also discussed and approved matters related to corporate governance as required by the regulators in Bahrain, and these included conflict of interest and performance evaluation of the members of the board and its committees.

Amendments to the procedural manual for prevention of money laundering as required by the CBB, have also been approved.

The company registered an increase of per cent in gross premium from BD38.2 million in 2013 to BD39.8 million last year, despite severe competition among companies for business both in Bahrain and Kuwait markets.

Gross earnings also increased by four per cent from BD14.2 million in 2013 to BD14.7 million last year.

Net incurred claims increased by 10 per cent from BD7.5 million in 2013 to BD8.3 million last year mainly due to increase in motor claims of Kuwait and medical claims of Bahrain.

Net profit increased by 14.5 per cent from BD3.7 million in 2013 to BD4.2 million in 2014 due to extraordinary gain of BD1.5 million recorded on sale of an investment property. - TradeArabia News Service