Chairman’s Message

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Dear Shareholders,

On behalf of myself and my fellow Board Members, I’m honored to submit to you the Fifty-Fourth Annual report of Gulf Insurance Group, which highlights the strong performance of the group during 2017, it also displays positive financial results of its operations, despite the global economic changes, which reflects the uniqueness of the group's strategy and its conservative policies as well as reflects the strength of its financial position.
The competitive pressure represents a daily challenge to the group, however, the group's strategy is a long term strategy, and this is due to the group's ability to adapt to the market trends in order to undertake the proper investments and provide long-term services and solutions required by its customers, which has given the group the ability to develop its mechanisms and the chance to seize opportunities that arise from the faced challenges, in order to continue improving its chain of services, as well as invest more into innovation and sustainability to serve its customers better than ever and to enhance its future growth.
The global growth has continued to strengthen since mid-2016, according to the International Monetary Fund (IMF) report, the growth has increased during 2017, and the world has witnessed the broadest synchronized global growth upsurge since 2010, the pickup in growth has been broad based, with notable upside surprises in Europe and Asia, global growth forecasts for 2018 and 2019 have been revised upward by 0.2 percentage point to 3.9 percent , the revision reflects increased global growth momentum and the expected impact of the recently approved U.S. tax policy changes, which is expected to stimulate the economic activity.
Despite the strengthening global recovery, the outlook for Middle East and North Africa (MENA) countries remain relatively subdued due to the continued adjustment to low oil prices and regional conflicts, for oil exporting countries, spillovers from the low oil price environment and fiscal adjustment continue to weigh on non-oil growth, while overall growth is also held down by the Organization of the Petroleum Exporting Countries (OPEC)- led agreement to reduce oil production, in addition to the previously mentioned, there is considerable uncertainty surrounding the outlook for oil prices, as well as the downside risks from regional conflicts and geopolitical developments also remain, Other, more global, risks could also affect the region including faster-than-expected normalization of monetary policy in the United States, and the pursuit of inward-looking policies by advanced economies.


Our Strategy Keeps Pace As Well As Supports Development Programs

Locally, the local economy was not far away from the global economy, the Kuwaiti economy has continued to recover from the slowdown witnessed in 2015 as a result of the financial reforms taken to deal with the decline in oil prices.


Over the past few years, the pace of capital spending has been a major driver of the non-oil economy, it is estimated that the value of projects allocated over the past five years has exceeded KD 28 billion by the end of 2017, as the projects that are still underdevelopment are characterized with momentum, the government continues to adhere to its ambitious strict capital spending regime for the national development plan, which is a part of the Kuwait 2035 vision, and it includes the infrastructure expenditure as well as the housing, energy, water and the oil sectors, it intends to represent about one third of the co-projects between the private and the public sectors.


During 2017, there has been numerous initiatives and procedures in the state of Kuwait, in the beginning of 2017 the government has launched the "New Kuwait 2035" project, afterwards an economic reformation document has been issued which has included drastic adjustments, most notably the activation of the role of the private sector companies in the financial reformation program and the involvement of companies listed on the stock market in the implementation of the development plans, then along came the economic key event which is the Kuwaiti Boursa initial entry to the global indices and it getting promoted from a start-up market to an emerging market according to a report issued by the international company "FTSE Russell", this promotion is ought to place the Kuwaiti market on the global investment map.


In align with the "New Kuwait 2035" vision, and according to the financial control procedures adopted by the state, the group plays a leading role as one of the largest insurance companies in the state of Kuwait, which seeks to support the initiatives of the fiscal balance programs as well as the states' plans to face short-term challenges, in addition to providing promising, high-end opportunities to the different categories, the group believes that its capacities would enable it to play an effective role in contributing to assist the state achieve what it seeks.


This leading role that the group holds is a reflection of its strategic vision for the group to become the regionally leading insurance group, in which the group's efforts to achieve it has been reflected through its outstanding results since its establishment , its efforts has continued to achieve qualitative transformation, comprehensive restructuring and organization of its business in order to provide superior services that meets the needs of its customers as well as exceeds their expectations and keep pace with the market developments, this has increased the group's market share to new levels in several sectors.

Enhance Our Geographical Outreach

We proudly announce that today we are one of the most leading insurance companies in the region, the group plays a key role in bridging the gap between the modern insurance requirements and the core values that the founders have secured since 1962 which will remain one of the most important values and pillars of the group.


Domestically, Gulf Insurance Group is considered to have one of the broadest network of branches in all parts of Kuwait, as well as a large client-base inside and outside the state, it is also considered to be the first insurance company in Kuwait and in the region that issues policies through multiple electronic channels including the internet and mobiles as well as it online and immediate approval on health claims, in addition to the automated health and general insurance claims recording and processing,Internationally, the group operates in 10 countries, in a pioneering experience for the Kuwaiti insurance sector, leading about 14 companies between subsidiaries and affiliates regionally widespread in various countries such as Bahrain, Egypt, Jordon, Syria, Iraq, Turkey, Saudi Arabia, United Arab Emirates, Algeria and Lebanon.


The effective and efficient implementation of the group's unified strategy is due to the balanced performance, interdependence and positive communication between the group's members both in its headquarters and in the various countries where it operates, which has mainly contributed to enhancing the governance process and provide high-end services in addition to the ability to deal with the developments and market fluctuations related to the future expected regulatory requirements, for this purpose, the group has been keen on unifying its vision and mission between all of its companies in order for all of them to be under the same identity to strengthen the group's strategy moving forward into the future.


The unified institutional brand identity of the group represents an extension of the legacy of the group's success over the past five decades, and as a reflection of the development it's witnessing through future expectations, the group has begun the unification between its companies by unifying the group logo as an initial step, so that it would carry the name of the country only instead of the various companies names, this is to give a unified image and impression of the brand form and ensure the comprehensiveness of the insurance programs as well as provide it to the widest range of our customers in all countries in which the group exists.


The group will continue with its efforts to strengthen its leading position in the domestic and international insurance sector, this shall be achieved through providing the best insurance products and services which will be suitable to all customer segments, backed by a superior security system provider by global reinsurers, the group will also continue to modernize the information and communication system in order to achieve leadership in the electronic services sector to provide the best service to all group customers

Precedence of Participation in National Projects


The realization of "Kuwait 2035" vision will be achieved through the use of a set of international indicators linked to the vision, these international indicators have also been linked to the policies of the Medium Term Development Plan 2015/2016 - 2019/2020, the plan included a total of 342 policies , has been activated implemented over the years of the project.


As one of the pillars of the Medium Term Development Plan (MDP), is the high quality health care, where the state has been concerned with providing a fully integrated health services system in an effective manner that imposes a qualitative leap on the health sector in the state of Kuwait, in order to grant access to appropriate and timely health care provided by a proper medical team.


The retired citizens health care act has been one of the most effective tools in achieving a premier health care, Gulf Insurance Group has had the opportunity to be the first to provide health care services to the retired citizens in the state of Kuwait in which is considered one of the most important national steps towards providing premier health care services, the group has successfully provided high-end service with the support of the experienced executive management team as well as the several years of a qualified infrastructure, the group has provided its services to over a 126,000 insured retired citizens included in the insurance coverage in addition to providing health coverage to private and oil sector clients, thus, increasing the number of the insured to more than 350,000 insured , the group has enhanced its coverage through a wide network of health care providers of up to 230 healthcare provider, comprising of all of the major hospitals, private clinics, laboratories and pharmacies in the state of Kuwait, the network covers the entire State of Kuwait to provide easy access to medical care when necessary.

Technologically The Best

The group has also continued its pioneering journey in the electronic services sector, this has been achieved through the use of modernized techniques and high-end technology, which has significantly contributed in increasing the operational effectiveness of the group as well as customers satisfaction by focusing on enabling customers anywhere they are around the clock to conduct their transactions, as well as provide new horizons for them to benefit from the various insurance services, These systems have also enabled the development of a comprehensive customer database, allowing the development of a 24/7 customer service center, which is an important step in maintaining and enabling the group's customers.

Continued Growth in the Midst of Global Market Volatility

Gulf Insurance Group has continued its strong performance in 2017, which ensures the accurate and effective implementation of the group's strategy achieving stable and sustainable growth within the framework of a balanced and a consistent performance within the group's companies across the different countries, this was done through a number of successful strategic initiatives which has been the cornerstone of enhancing insurance services on a group level.


The group has earned 10,289,492 KD net profit in 2017, recording a return on assets of 2.1% and a return on shareholders' equity of 12.2% which is considered to be one of the highest return on equity in the insurance sector, reflecting the strong and good performance achieved by the group in all areas of business.


The above reflects the flexibility, quality and diversity of the group's earnings amidst a challenging, global operating environment, in which the group has retained its leading position in the State of Kuwait and has succeeded in enhancing synergies between its overseas operations in order to provide its customers with the best insurance experience.

Strong Credit Rating

In recognition of the continuity of the group in achieving strong results year by year in terms of solvency and capital quality, as well as the stability of the group's growth rates in future terms, and in order for the group to continue being distinguished and retain the highest credit rating given by the world's leading credit rating agencies which are Standard & Poor's, Moody's and A.M Best, the group has a rating of an A (excellent) with a stable outlook from A.M Best for rating services, Standard & Poor's Ratings upgraded the group's rating to an A- with a stable outlook as well as an "A3" by Moody's.

As well as one of the group's subsidiaries – Gulf Insurance & Reinsurance Company has managed to maintain its credit ratings from all three agencies, an A- by Standard & Poor's, an A (Excellent) by A.M Best and an A3 rating its financial strength by Moody's with a stable future outlook given by all three agencies.

Appreciation by Prestigious International and National Organizations

As the Group reached its 55th year, it is my pleasure that the process is culminated with recognition by the international and national financial markets, which is evidenced by all the prestigious prizes rewarded to the Group during 2017. As an example but not limited to, is the Insurance Brand of the Year, 2017 by the World Branding Awards, which was presented to the Group during a ceremony held at the Kensington Palace, London in the presence of leading international figures. The Group also won the Best Insurance Brand Award in the Middle East and North Africa (MENA) region for 2017 presented by Global Brands, the award considered appreciation for the Group's continued commitment to innovation, quality, branding, performance and superior customer service in the Middle East and North Africa (MENA) region, and in the area of regulatory and compliance framework, the Capital Markets Authority in the State of Kuwait has classified Gulf Insurance Group as one of the top ten companies with the best adherence to submitting the Corporate Governance annual report, which is considered as a recognition by prestigious international and national organizations, and the best proof of the Group's success year after year till it was able to occupy a leading position among insurance companies in the region as a whole

Building a Leading Generation That Assumes Future Responsibility

The group's personnel is considered to be the most valuable asset from which the group derives its strength and good reputation, the group has enhanced its investment in human resources through a number of programs, as an example the Management Development Program (MDP), which is an academic program aimed to recognize young talents with professional and educational qualifications and assists in the preparation of future leaders in order to achieve domestic and non-domestic gains of knowledge and skills, as well as qualify them for managerial positions in the group and the insurance sector as a whole.


During 2017, the group's efforts culminated in the graduation of the fourth class of the Management Development Program (MDP), which has included 12 interns, this success was reinforced by the fact that the female interns has dominated by more than half the number of the graduated class, this is an evidence of the group's belief in the importance of encouraging and empowering the role of women in achieving sustainable development.


The group has also been keen on continuing to enhance the training and development level to all of its work force, one of the training milestones during 2017 was holding workshops for managers and leaders in order to structure a unified strategy for the group as a whole, the training was conducted through three phases, and it has been presented by international academic experts.

The Group's Corporate Governance Culture

There is no doubt, that the achieved success during 2017, has been supported by a sound corporate governance system, which the group thrives to maintain the highest level of transparency standards and mechanisms through all of its operations, in addition to its adherence to regulatory and legislative standards whether in the State of Kuwait or across the countries in which the group companies operate, and as previously mentioned, the Capital Markets Authority in the State of Kuwait has named Gulf Insurance Group as one of the top ten companies with the best adherence to submitting the Corporate Governance reports.

It also should be noted that during 2017, the group hasn’t faced any penalties by any of the regulators and supervisory entities.

Social Responsibility is an Authentic Part of the Group's Identity

The group's social responsibility is an integral part of the group's identity as one of the region's leading insurance companies, as it has had numerous social contributions in various situations, in this regards, Gulf Insurance Group has been keen to develop a social program that will touch on all the issues affecting the Kuwaiti society and that will contribute to improving the lives of the citizens, in this regards, the group has supported numerous outstanding events in various fields, whether health-related, charity wise or educational wise, and I must mention to the group's interest during 2017 in supporting the academic excellence in coordination with the American University in Kuwait, the group has also strengthened its partnership with the Protégés Organization for this year by supporting and sponsoring the 7th Generation Graduation project, in addition the group has also supported the Kuwait Association for the Care of Children in Hospitals (KACCH) as well as Bayt Abdullah Children's Hospice (BACCH), this was achieved through contributing in providing the insurance needs of the association and the hospital, And all the group’s social contributions has been included within the group's annual report.

Our Future Aspirations


With the outlook for Kuwait's non-oil economy to improve on the impact of projects and moderate fiscal reforms, we look forward for better future prospects regarding the economy, therefore, we direct our focus on the strengths we have achieved through our good reputation in the domestic and non-domestic markets, as well as we aim to achieve significant progress coupled with strategic plans to exceed customer expectations and enhance their experience as well as increase profitability so that Gulf Insurance Group would be the top tier of the leading insurance services providers in its selected markets, we look forward to achieving operational excellence in the group, and we have the primary objective of driving sustainable revenue growth and delivering good value to our shareholders.


Recommendations and Suggestions

The Board of Directors is pleased to recommend to the General Assembly the following dividends for the profits of the financial year ended 31/12/2017, which amounted to 39,748,795 KD as per the following:


KD 1,095,863

for the voluntary reserve


KD 5,370,012

of the Share Capital as cash dividends for the shareholders representing 30 fils per share (compared to 40 fils per share in previous year) taking into consideration the number of treasury shares, the remaining amount KD 33,282,920 to be retained forward to the next year.


Gratitude and Appreciation


In conclusion, and on behalf of myself and my fellow Board members of the group and its executive management, we would like to extend our heartfelt gratitude to His Highness Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah Prince of the State of Kuwait, His Excellency Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah the Crown Prince, for their wise leadership of the state towards achieving more advancement. We also would like to express our deepest appreciation to the Ministry of Commerce and Industry and the Department of Insurance Companies as well as the Capital Markets Authority and the Kuwait Boursa for their understanding to the situation of the local market and for seeking its best interests.


The appreciation also goes to the Ministry of Interior represented by the General Department of Traffic for their constant efforts to improve the compulsory traffic accident of the insurance sector.


We also deeply thank and appreciate our distinguished clients and as well as local and international reinsurers & insurance brokers for giving us their trust, continuous support and cooperation.


Moreover, we would like to extend our appreciation to the group’s management and personnel for their great efforts and dedication which contributed in achieving the targeted results, we also would like to thank Kuwait Projects Company (Holding), our largest shareholder, and Fairfax Financial Holding Limited, our second largest shareholder for their constant cooperation and support. We hope that 2018 will see the achievement of the goals for which we aspire.

May the peace, mercy, and blessings of Allah be upon you,,,

Farqad Abdullah Al Sanea
Chairman of the Board of Directors