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FOR IMMEDIATE RELEASE
LONDON - JANUARY 30, 2019 10:41 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 Family PJSC (NTF) (United Arab Emirates). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect NTF’s balance sheet strength, which AM Best categorises as strong, as well as its adequate 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 very strong level as at year-end 2017, as measured by Best’s Capital Adequacy Ratio (BCAR). Given NTF’s small capital base, AM Best believes that prospective risk-adjusted capitalisation is susceptible to volatility and dependent on the future growth and performance of the individual family and medical portfolios. The balance sheet strength assessment also considers NTF’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 NTF is now compliant with local solvency regulations.
NTF has demonstrated a track record of operating profits, generating a five-year (2013-2017) average return on equity of 5.4% that was supported by underwriting profits in most years. Operating results benefit from diversification in earnings between NTF’s family and medical business segments and are further supplemented by investment returns; NTF’s investment portfolio delivered a five-year (2013-2017) average net investment yield (excluding gains) of 2.0%. The company’s future operating earnings will likely be influenced by changes in its business mix as NTF continues to increase its gross contributions in order to achieve its ambitious business plans. NTF’s business profile is limited as a result of the small size of its portfolio concentrated exclusively within the UAE Takaful insurance market.
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