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null A.M. Best Affirms Ratings of Abu Dhabi National Insurance Company P.S.C.

A.M. Best Affirms Ratings of Abu Dhabi National Insurance Company P.S.C.

17 Aug 2014

A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a” of Abu Dhabi National Insurance Company P.S.C. (ADNIC) (United Arab Emirates). The outlook for both ratings remains stable.

The ratings reflect ADNIC’s strong risk-adjusted capitalisation, established position in the United Arab Emirates (UAE) market, and consistently strong profitability.

ADNIC’s risk-adjusted capitalisation remains strong despite a gradual decline in recent years with capital requirements continuing to outpace internal capital generation. This is driven by ADNIC’s strategic decision to become a genuine risk carrier with higher retention across most business lines in addition to diversification of the investment portfolio from cash to fixed-income securities. Risk-adjusted capitalisation is sufficiently strong to absorb dividend payments of 50% of paid-up capital and average growth of 9% expected over the next three years.

ADNIC maintains a leading position within the UAE market with a diversified portfolio across the non-life and medical business segments. The company achieved a 5% growth rate in 2013, which increased premium revenue to AED 2.4 billion (USD 655 million).

ADNIC has demonstrated strong technical profitability with combined ratios consistently below 90%, primarily driven by good performance on commercial lines. The company’s earnings remain strong, with a net income of AED 181 million (USD 49 million) in 2013 compared to AED 145 million (USD 39 million) in 2012. ADNIC’s performance is expected to remain sound as it continues to tighten underwriting guidelines, particularly on medical business. For the first six months of 2014, ADNIC reported a profit of AED 104 million (USD 28 million), up 8% on the restated AED 97 million (USD 26 million) reported in 2013.

Upward rating movements are unlikely in the near term. Downward rating pressures could arise if there were a material or prolonged deterioration in ADNIC’s financial performance and/or risk-adjusted capitalisation.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process.

Resource: http://www3.ambest.com/ambv/bestnews/presscontent.aspx?AltSrc=14&refnum=21525

 

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