Bahrain National Holding Company (Trading Code: BNH) announced its financial results for the fourth quarter and for the year ended 31st December 2020.
For the fourth quarter ended 31st December 2020, the Group achieved a net profit attributable to the shareholders of BD1.05 million compared to BD251 thousand during the fourth quarter of the previous year, an increase of 317%. The earnings per share for the fourth quarter was 9.3 fils compared to earnings per share of 2.3 fils during the same period of 2019. The total comprehensive income attributable to the shareholders for the fourth quarter ended 31st December 2020 grew by 174% to BD2.39 million, compared to total comprehensive income attributable to the shareholders of BD870 thousand during the same period of 2019.
The Group achieved gross insurance premiums in the fourth quarter of BD9.23 million, compared to BD6.46 million in the fourth quarter of last year, an increase of 43%. The net earned premiums in the fourth quarter was BD4.08 million, compared to BD4.32 million in the fourth quarter of last year, a decrease of 6%. The Group achieved a net underwriting profit of BD527 thousand during the fourth quarter, compared to a net underwriting loss of BD168 thousand reported in the same period of 2019. Net investment income after impairment loss increased by 9% to BD601 thousand during the fourth quarter, compared to BD551 thousand in the fourth quarter of the previous year. The Group's share of profits of equity accounted investees was also increased by 36% to BD503 thousand during the fourth quarter, compared to BD370 thousand in the fourth quarter of the previous year.
For the year ended 31st December 2020, the Group achieved a net profit attributable to the shareholders of BD4.94 million, compared to BD4.79 million during the last year, an increase of 3%. Earnings per share was 43.8 fils compared to 42.6 fils for the year 2019. The total comprehensive income attributable to the shareholders for the year ended 31st December 2020 was BD5.92 million, compared to BD6.71 million during the last year of 2019, a decrease of 12%.
The increase in the net profit for the year 2020 compared to the last year can be primarily attributed to the rise in net underwriting profits.
Gross premiums grew by 9% to BD36.7 million compared to BD33.80 million in 2019. Net earned premium decreased by 5% to BD16.5 million, compared to BD17.51 million of last year. This decrease was primarily due to higher reinsurance of premium. Net underwriting profits showed a marked improvement to BD3.60 million during the year 2020, compared to BD2.06 million last year, an increase of 75%. This improvement was primarily the result of lower net claims, especially in the Motor segment. The net investment income after impairment losses dropped by 21% to BD2.39 million compared to BD3.01 million in 2019. The Group's share of profits of equity accounted investees decreased by 37% to BD1.02 million, compared to BD1.62 million in the previous year. This decrease was a result of the impact of the pandemic on regional markets and the operations of our investments in associates. However, the fair value reserve of the Group increased by 22% from BD4.6 million to BD5.6 million due to careful management of the diversified investment portfolio.
The total shareholders' equity (excluding non-controlling interest) as at the end of the year 2020 was BD57.25million compared to BD53.84 million as at the end of the previous year, an increase of 6%. The total assets reached BD110.69 million compared to BD105.83 as at the end of the last year, an increase of 5%.
In view of the strong performance in 2020, and after considering the Group's future requirements, the board of directors is pleased to recommend an annual cash dividend of 22% subject to shareholders’ approval at the Annual General Meeting, compared to the approved dividend 22% in 2019.
Mr Farouk Almoayyed, Chairman of Bahrain National Holding, commented: "It is my pleasure to report to our shareholders that for the year 2020, the Group has surpassed the record profit made in 2019. This result is particularly gratifying in the difficult circumstances that faced all of us in 2020. Despite the challenges presented in the first half of 2020, the Group has excelled and shown a strong commitment to its stakeholders during this difficult period. As news of new virus strains continues to hold back economic activity, we mustn't be complacent in our approach, and we must strive to build on 2020s achievements. Undoubtedly, the pandemic has permanently changed many aspects of the insurance sector, as it has for all other sectors, but the Group remains focused on emerging successful and maintaining its lead in this changing environment. Apart from the commitment of our employees, and the loyalty of our customers, our balance sheet strength will play an important role in this effort."
Mr Sameer AlWazzan, Chief Executive of BNH, commented: "We are happy to report the highest net profit in the past 11 years despite the challenging environment. While Motor premiums were lower due to a drop in car sales, we managed to defend the portfolio well despite the severe competitive pressures. Moreover, our claims and recovery teams did a very creditable job despite the disruptions, especially in the first half of the year. It is worth noting our employees' tremendous dedication to ensuring that customer services and the Group's key projects, such as the IT core system implementation, were not impacted during this challenging time. We worked on adjusting our services proactively anticipating our customers' needs, which helped us retain clients and increase our topline. Lower claims and cost control reflected positively on the Group's performance. On the investment side, our overall performance was impacted by the regional markets, but our diversification into international markets and our strong cash position helped us protect the portfolio value. Some of our associates' performance was impacted in the first half, but the performance gradually normalized in the second half of 2020. We anticipate 2021 to be another challenging year due to the broad economic pressures on some sectors and the ability to pay for insurance services. However, we believe in continuously supporting our loyal customers and ensuring that we navigate this challenging phase in a spirit of co-operation. We will also pick up the pace on our digitalization initiatives in 2021 to bring us closer to our customers."