$51.1 million loss at Arab Insurance Group
Bahrain based Arab Insurance Group (ARIG) announced today that its bottom line had suffered in the wake of the September 11 attacks on the US.
Bahrain based Arab Insurance Group (ARIG) announced today that its bottom line had suffered in the wake of the September 11 attacks on the US. For the third quarter of 2001, the group reported a loss of US$ 51.1 million as result of Arig Re, the group’s reinsurance subsidiary, which has been heavily affected by claims arising out of the terrorist attacks on the USA.
As a reinsurer of United Airlines and American Airlines, Arig Re will sustain an overall claim amount of $US 28.2 million, said the company. The slump in international stock markets following the terrorist attacks has also affected the company’s investment performance pushing the capital of Arig Re below the comfort level defined by international rating agencies for top ratings.
The loss compares to the overall exposure of worldwide insurance and reinsurance markets, which is now expected to exceed US$70 billion. “It is quite obvious that the traumatic events of the 11th September in the United States affect Arig at a rather vulnerable time. Arig has an immaculate reputation in international insurance markets, with regard to fair and timely claims settlements, and is now well prepared for the strategic challenges of the future,” said Udo Krueger, CEO of ARIG .
According to management sources, various options to increase Arig Re’s capital are therefore currently being investigated in close dialogue with the founding shareholders, the governments of Kuwait, Libya and the United Arab Emirates. Among these options are direct capital injections by these sovereign shareholders into Arig Re and a proposal to underwrite reinsurance business under the full protection of the Group capital.
“Turnaround scenarios as we currently witness them in Arig create a fragile environment – strategically, financially, and socially. In the overall operation you are required to absorb additional clean-up expenses by strengthening your provisions in your balance sheet while at the same time cutting off revenue streams of non-performing products. So far we have done extremely well and are in fact ahead of schedule.” added Krueger.
According to Krueger, the discussions with the sovereign shareholders have so far been promising and will continue. He expects a decision on the appropriate course of action and its implementation before the end of the year.