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FOR IMMEDIATE RELEASE
LONDON - JANUARY 30, 2020 10:24 AM (EST)
AM Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term ICR of “bb” of Noor Takaful Family PJSC (NTF) (United Arab Emirates). The outlook of the FSR remains stable.
The Credit Ratings (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 (ERM).
The positive Long-Term ICR outlook reflects the ongoing strengthening of NTF’s ERM capabilities. The company historically operated with sound silo risk management practices; however, in recent years, NTF has undertaken steps to establish an enterprise-wide risk-aware culture and implement tools to manage its risk exposures consistently. AM Best expects that further anticipated improvements will lead to an ERM framework that is appropriate given the scale and complexity of NTF’s operations.
NTF’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). However, prospective risk-adjusted capitalisation is susceptible to volatility given NTF’s small capital base. The balance sheet strength assessment also considers NTF’s conservative investment portfolio and its proven financial flexibility in the form of capital injections.
NTF’s business profile is limited as a result of the small size of its portfolio and its concentration within UAE’s life and medical takaful insurance markets. Due to its size and position as a relatively new player in its domestic market, the company’s operating performance has been modest but positive, with an average return on equity over the past five years (2014-2018) of 4.4% (as calculated by AM Best). The company recorded a net profit of AED 2.1 million for the first nine months of 2019 (same period 2018: AED 3.8 million), with lower profitability on medical business lines offset by stabile returns on the life portfolio. AM Best expects the company to continue generating modest net profits over the short to medium term.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.