Middle East

Arig reports net loss

Arig, the Middle East based reinsurer, has announced a US$10.8mn loss for third quarter 2008. Arig said that the bulk of the loss was due to investment losses despite the company’s conservative investment strategy which includes minimal real estate exposure and an equity portfolio which accounts for only 12.0% of total invested assets. The company emphatically noted that it had no exposure to troubled assets such as sub-prime related investment instruments or shares in financial institutions. To further reassure stakeholders, Arig also pointed out that although it was technically a publicly listed company, its major shareholders are the governments of Libya, Egypt and Bahrain: a situation which clearly reduces the prospect, in the current financial climate, of a major sell-off of the company’s shares. Despite a 29.0% increase in net earned premium income, the company still reported an underwriting loss of US$7.7mn. The company blamed deterioration in the result on investment losses on funds specifically tied to underwriting accounts. Arig said a significant portion of the loss on investments was unrealized, and that it could have reported a lower loss by reclassifying its investments as permitted under the recent amendments to IFRS rules but it chose not to do so in order to maintain transparency and consistent accounting policies.