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FOR IMMEDIATE RELEASE
LONDON - JANUARY 30, 2019 10:40 AM (EST)
AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb” of Noor Takaful General PJSC (NTG) (United Arab Emirates). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect NTG’s balance sheet strength, which AM Best categorises as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management.
The company’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which remained at the strongest level as at year-end 2017, as measured by Best’s Capital Adequacy Ratio (BCAR). Given NTG’s small capital base, AM Best believes prospective risk-adjusted capitalisation is susceptible to volatility and dependent on the portfolio’s future growth and performance. The balance sheet strength assessment also considers NTG’s conservative investment portfolio and its proven financial flexibility in the form of capital injections. Capital management actions recently undertaken by the company have ensured NTG is now compliant with local solvency regulations.
NTG’s operating performance is marginal, having generated underwriting losses in each of the past five years. Underwriting results are underpinned by volatile claims experience with the company reporting a five-year (2013-2017) average non-life combined ratio of 114% (as calculated by AM Best). NTG generated a modest operating profit of AED 0.2 million in 2017, with investment returns more than offsetting technical losses incurred during the year. Third-quarter results in 2018 indicate an improvement in technical returns as a result of stricter underwriting discipline, with the company’s loss ratio reducing to 34% from 52% for the same period during 2017. AM Best expects that NTG will deliver modest operating profits for year-end 2018.
NTG’s business profile is limited as a result of the small size of its portfolio concentrated exclusively within the UAE Takaful insurance market. The company is targeting an ambitious growth strategy to enhance its presence in its core lines of business; however, NTG’s business plans carry significant execution risk given the highly competitive nature of the insurance markets it operates within.
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.
A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry.