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LONDON – (BUSINESS WIRE) –
AM Best assigned a financial strength rating of A (excellent) and a long-term issuer credit rating of “a” (excellent) to Abu Dhabi National Insurance Company PJSC (ADNIC) (United Arab Emirates). The outlook assigned to these credit ratings (ratings) is stable.
The ratings reflect the strength of ADNIC’s balance sheet, which AM Best considers to be very strong, as well as its strong operational performance, neutral business profile and appropriate management of corporate risks.
ADNIC’s balance sheet strength is based on its risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR), at the highest level. AM Best expects ADNIC’s BCAR scores to remain comfortably at the highest level, supported by good profit retention and controlled growth. The company benefits from a liquid investment portfolio and good financial flexibility. A compensating factor in the assessment of balance sheet strength is ADNIC’s reliance on reinsurance to underwrite significant business risks; however, the risks associated with this dependence are partially mitigated by a panel of mostly well-rated reinsurers.
ADNIC has a history of strong operational performance, demonstrated by a weighted average return on equity ratio over five years (2016-2020) of 13.2%. Strong operating performance is supported by strong technical results, with a five-year average combined ratio of 85.6%. After five years of improving profitability, the company recorded its highest after-tax profit since its inception, at AED371 million in 2020, thanks to reduced frequency of claims on its extensive medical portfolio. AM Best expects the company’s operating performance to remain strong forward-looking, supported by disciplined underwriting and stable investment results.
ADNIC occupies a leading position in the United Arab Emirates market, where it ranks second among insurance companies in terms of gross written premiums (GWP). In 2020, the company’s GWP increased slightly to AED 4.0 billion (2019: AED 3.8 billion), driven by growth in business activities. ADNIC is well diversified by industry on the basis of GWP, but concentrated in medical on the basis of net premiums. The geographic concentration in the UAE is partly mitigated by the incoming facultative business from the international market.
This press release relates to credit ratings published on the AM Best website. For all rating information relating to the publication and relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this publication, please see AM Best’s Recent Rating Activity webpage. . For more information on the use and limitations of credit rating reviews, please see Best’s Guide to Credit Ratings. For more information on the proper use of Best Credit Ratings, Best Preliminary Credit Ratings, and AM Best press releases, please see the Guide to Appropriate Use of Best Ratings and Ratings.
AM Best is a global credit rating agency, news publisher, and data analytics provider specializing in the insurance industry. Based in the United States, the company operates in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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Source: AM Best