Stock DFM Dubai market
Dubai Insurance is doing enough to get the attention of investors. The second quarter numbers are quite revelatory. Image Credit: Ahmed Ramzan/Gulf News

For the week ended August 5, the DFM closed higher by 1.98 percent and ADX rose 1.38 percent. The top gainers were Ras Al Khaimah Ceramics (by 18.70 percent), National Takaful Company (15.12 percent), Al Mal REIT (14.02 percent), Ras Al Khaimah White Cement (11.63 percent), Methaq Takaful Insurance (10.15 percent), and Dubai National Insurance (10 percent).

Dubai Insurance Company, with a Dh750 million market cap and 4.67 per cent dividend yield, delivered stellar results for the second quarter. The company, which provides both life and general insurance, has bounced back with the reopening of the economy.

General gains

During the second quarter, revenues surged by 111.4 per cent to Dh96.2 million while net profit jumped 51.45 percent to Dh15.6 million. General insurance was the star performer, with the portfolio growing 189 per cent to Dh63.6 million. As everyone knows, 2020 was a disaster for companies in the general insurance sector as economic activity had come to a standstill due to coronavirus-induced lockdowns.

However, the recovery in this category that deals with fire, marine, motor, accident, and other miscellaneous non-life insurance is a good sign as it is a proxy for the general economy. The life insurance business also performed well, with a 79 percent growth to Dh25.3 million.

Overall, general insurance contributed 62 per cent of revenue, while life insurance had a 25.30 percent share with the remaining 12.70 percent provided by investments. Nonetheless, it is worth noting that the second quarter performance is not a one-off bump due to the normalization of the economy. Yet, it seems Dubai Insurance's performance has not caught the attention of investors.

Best in history

The second-quarter revenue was the largest quarterly it has generated in its history. From Dh108 million in 2010, it has now more than doubled to Dh263 million over the trailing 12 months (TTM). Net income also during the period more than doubled to Dh59.8 on a TTM basis.

The company is debt-free, and holds Dh144 million worth of cash and cash equivalents on its books. These are sufficient for technological improvement plans.

The icing on the cake is the dividend policy, which has shown an upward trend. It has issued cash dividends every year since 2011, and the dividend per share has grown from Dh0.25 to Dh0.35 currently. This shows superior management quality as companies with good corporate governance practices distribute profits regularly to shareholders. Dubai Insurance, at its current price, offers excellent value as a perfect proxy to play the normalization of the economy.