Al Khazna posts Dh26.4m profit

Hit by lower interest rates leading to reduced returns on investments and the general downtrend in the sector, Al Khazna Insurance Co. posted a net profit of Dh26.4 million in 2001 compared to the previous year's Dh33.6 million.

Shareholders ratified a 7 per cent dividend (Dh7 per share), totalling Dh26.6 million, the same as in 2000.

Earnings per share (EPS) fell to Dh6.96 from Dh8.85 in 2000. Net investment and other income declined to Dh20.2 million from Dh28.4 million, and impacting on profitability.

"The depreciation of investment income had a major effect on the company's net profit. A large portion of the company's investments (Dh251.3 million in 2001 and Dh417.5 million in 2000) placed in the form of bank deposits earned little due to falling interest rates," said a senior official. The company has started shifting investments to ensure higher yields, he added.

Al Khazna's balance sheet grew to Dh504.4 million from Dh489.7 million for the period under review.

Net book value of investment in property, plant and equipment end-2001 stood at Dh44.13 million, which represents capital work in progress (almost completed) in the Al Khazna tower project, the new headquarters of the company in Abu Dhabi. The total cost of the project was Dh42 million.

The company's income statement showed gross premium underwritten in 2001 touched Dh95.7 million compared to Dh90 million in 2000.

Net premium earned increased to Dh23.2 million from Dh16.2 million. However, net commission fell to Dh9.9 million from Dh11.6 million. Underwriting income went up marginally to Dh20.1 million from Dh19.5 million.

Al Khazna has an authorised and fully paid-up capital of Dh380 million. Shareholder's equity has grown to Dh445.6 million from Dh445.3 million.

The company has three branches, one each in Abu Dhabi, Al Ain and Dubai. The shares currently trade at around Dh120.