Al Dhafra Insurance Co

1. Company Overview & Earnings Context

Al Dhafra Insurance Company P.S.C. is a UAE insurance company whose underwriting operations cover general insurance classes including fire, marine, motor, medical, general accident and miscellaneous insurance. The company also maintains a sizeable investment portfolio across equities, investment funds, bonds, term deposits, investment properties and other securities.

H1 2026 was characterised by exceptionally strong insurance revenue growth but broadly stable overall profitability. Insurance revenue surged to AED 681.77 million, while net profit after tax stood at AED 37.51 million, compared with AED 38.13 million in H1 2025.

2. Financial Performance Snapshot

• Insurance Revenue: AED 681.77 Million (+268.4% YoY)

• Insurance Service Result Before Reinsurance: AED 508.67 Million (+500.6% YoY)

• Insurance Service Result: AED 7.40 Million (-23.6% YoY)

• Total Investment Income: AED 26.61 Million (-17.6% YoY)

• Profit Before Tax: AED 39.28 Million (-2.6% YoY)

• Net Profit: AED 37.51 Million (-1.6% YoY)

• EPS: AED 0.38, unchanged YoY

• Operating Cash Flow: AED 175.29 Million, vs. AED 19.92M

The standout feature was the huge increase in insurance revenue, although this did not translate into equivalent bottom-line growth because of substantially higher reinsurance allocations and weaker investment income.

3. Insurance & Reinsurance Performance

Insurance revenue increased from AED 185.05 million to AED 681.77 million, while insurance service expenses increased to AED 173.10 million from AED 100.36 million. Consequently, the insurance service result before reinsurance jumped to AED 508.67 million from AED 84.69 million.

However, the increase in business was accompanied by a very large rise in reinsurance. Allocation of reinsurance premiums reached AED 628.46 million, compared with AED 145.19 million in H1 2025. Amounts recoverable from reinsurance for incurred claims increased to AED 127.20 million from AED 70.19 million.

As a result, the final insurance service result declined to AED 7.40 million from AED 9.70 million, despite the substantial increase in gross insurance revenue.

This indicates that much of the dramatic increase in insurance activity was accompanied by a correspondingly large increase in reinsurance utilisation.

4. Key Performance Drivers

The largest positive driver was clearly the expansion in insurance revenue, which increased by almost AED 497 million YoY. The underwriting segment generated AED 12.67 million of profit before tax, compared with AED 8.03 million in H1 2025.

Investment performance was weaker. Net investment income declined to AED 26.61 million from AED 32.27 million. Dividend income increased to AED 19.83 million from AED 18.27 million and interest income rose modestly to AED 5.47 million, but the company recorded an AED 3.55 million fair-value loss on FVTPL investments, compared with an AED 7.77 million gain in H1 2025.

Other operating income provided meaningful support, increasing to AED 9.79 million from AED 2.37 million. This helped offset the weaker insurance service and investment results and kept profit before tax broadly stable at AED 39.28 million.

Overall, the investment segment remained the largest contributor to profit before tax at AED 26.61 million, compared with AED 12.67 million from underwriting.

5. Balance Sheet, Solvency & Cash Flow

Al Dhafra Insurance ended June 2026 with:

• Total Assets: AED 1.73 Billion

• Total Equity: AED 591.57 Million

• Total Liabilities: AED 1.14 Billion

• Fair-Value Investments: AED 532.25 Million

• Operating Cash Flow: AED 175.29 Million

• Dividends Paid: AED 35.00 Million

Total assets increased significantly from AED 1.38 billion at the end of 2025 to AED 1.73 billion, while total equity remained broadly stable at AED 591.57 million compared with AED 591.86 million. The company paid AED 35 million in dividends during H1.

Cash generation was particularly strong. Net cash generated from operating activities surged to AED 175.29 million from AED 19.92 million, largely reflecting movements in insurance and reinsurance contract assets and liabilities. Investing activities generated another AED 42.70 million.

Importantly, Al Dhafra remained compliant with solvency regulations. Basic Own Funds stood at AED 340.67 million against a Solvency Capital Requirement of AED 233.86 million, leaving an SCR solvency surplus of AED 106.82 million.

6. Investor Takeaway

Al Dhafra Insurance delivered exceptional top-line expansion in H1 2026, with insurance revenue increasing more than 3.6x to AED 681.77 million. However, the final insurance service result declined to AED 7.40 million as the significant increase in business was accompanied by substantially higher reinsurance allocations.

Headline profitability remained remarkably stable despite these major movements. Net profit declined only 1.6% to AED 37.51 million, while EPS remained unchanged at AED 0.38. Stronger underwriting-segment profit and higher other operating income helped offset lower investment income.

A major positive was cash generation and solvency strength. Operating cash flow increased sharply to AED 175.29 million, while the company maintained an AED 106.82 million surplus over its Solvency Capital Requirement. Total assets also expanded to AED 1.73 billion.

The independent reviewer issued an unmodified conclusion, stating that nothing had come to its attention indicating that the interim financial information was not prepared, in all material respects, in accordance with IAS 34. Going into H2 2026, the key areas to monitor are insurance revenue growth, reinsurance utilisation, insurance service profitability, investment returns, operating cash generation and maintenance of the company's strong solvency position.