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FOR IMMEDIATE RELEASE
LONDON - JULY 20, 2017 12:12 PM (EDT)
A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Emirates Insurance Company P.S.C. (EIC) (United Arab Emirates). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect EIC’s excellent business profile within the United Arab Emirates (UAE), its strong risk-adjusted capitalisation and its track record of good technical and operating performance. An offsetting rating factor is the company’s concentrated investment portfolio, which is weighted toward domestic equities.
EIC has maintained its ranking as the UAE’s fourth largest listed insurer, with gross written premium (GWP) growing by 9% during 2016, to reach AED 1.02 billion (USD 278 million). EIC’s profile is enhanced by Emirates Insurance Company International (EIC Intl), the company’s specialty reinsurance branch. EIC Intl provides EIC with greater product and geographical diversification, and accounts for 23% of the company’s total GWP. The remaining 77% of business is derived from EIC’s domestic market.
EIC’s risk-adjusted capitalisation remains very strong, with capital consumption largely driven by investment risk. Whilst A.M. Best recognises the shift in the company’s investment portfolio toward fixed-income investments, local equity holdings still constitute a significant portion of the company’s total investments at year-end 2016, accounting for 42%. Despite EIC’s concentrated investment portfolio, its capital position remains sufficient to absorb volatility driven by these equity holdings. Internal capital generation is expected to remain limited by the company’s dividend policy, however, the company has a strong capital buffer to support future strategic initiatives.
The company’s technical performance is good, demonstrated by a five-year average combined ratio of 87%, however, competitive market pressures, in addition to volatility in EIC Intl’s portfolio, has resulted in the combined ratio gradually increasing over the past five years to 92% in 2016. EIC achieved an overall operating profit of AED 87 million (USD 24 million) in 2016, which was equivalent to a sound return on equity of 9%. Lower, albeit still strong, underwriting income has meant the company’s profits are weighted slightly in favour of investment income, with net investment income totaling AED 45 million (USD 12 million) during 2016.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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