'The improved performance has come about in a reinsurance market that is experiencing strong hardening tendencies in all lines of business,' says an Arig statement. The performance has also been boosted by some strategic repositioning. The company has ceased to be involved in the aviation insurance business and has focused its activities on the Arab world.

However, the heavy losses of the last three years have led to serious erosion of Arig's capital base - total shareholders' equity had fallen to $150 million by the end of March, from a high point of $462 million at the end of 1998.

'We are continuing the discussion and evaluation of suitable options to strengthen Arig's balance sheet with our founding shareholders, the governments of Kuwait, Libya and the UAE,' says Udo Kreuger, Arig's chief executive. 'It is envisaged that the financial restructure of the group will be completed during the summer, when the general assembly will elect the board of directors for the next three-year term.'