Bahrain-based Arab Insurance Group (Arig) has reported net profits of $4.5 million for the first half of the year, down 45 per cent on the $8.1 million recorded in the same period of 1998. 'The decline in profits is largely a result of continuing depressed market conditions prevailing in the global reinsurance business,' says a company spokesman.

Arig's search for a new chief executive - the post has been vacant since early June - continues to be fruitless, but the spokesman says the board might be drawing closer to making an appointment.

Despite diversifying into the region's non-reinsurance sector, Arig's core business continues to be reinsurance. In the first six months of the year, Arig Re - the reinsurance subsidiary - made a loss of $1.8 million, compared to a profit of $16.7 million in the same period last year. 'Like everyone else, Arig Re is operating in a tough environment,' says Jose Sanchez-Crespo, an insurance analyst at US credit ratings agency Standard & Poor's. 'Reinsurance rates are soft, and Arig's overall performance is in line with expectations.'

Sanchez-Crespo says that Arig has performed better this year than the interim results might suggest. 'It remains well capitalised, and it has maintained a good profile in a difficult market,' he says.

However, until the international reinsurance market firms the company is unlikely to see dramatically improved performances. 'Some people are beginning to see the first signs of improvement in the market, but there will be no overnight recovery,' Sanchez-Crespo says.