AM Best

A.M. Best Affirms Credit Ratings of Alliance Insurance (PSC)

 Borja Cubillo, CFA
Financial Analyst
+44 20 7397 0306

Salman Siddiqui
Associate Director, Analytics
+44 20 7397 0331

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


LONDON - SEPTEMBER 13, 2018 08:44 AM (EDT)
A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Alliance Insurance (PSC) (Alliance) (United Arab Emirates). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Alliance’s balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

Alliance’s balance sheet strength is underpinned by risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which is consistent with the strongest assessment. Furthermore, balance sheet strength benefits from a conservative investment strategy, low underwriting leverage and a well-rated reinsurance panel, which mitigates the credit risk associated with the company’s significant reinsurance dependence. A.M. Best expects Alliance’s prospective risk-adjusted capitalisation to remain at the strongest level, with good internal capital generation supporting the company’s strategic initiatives. The company also benefits from an unleveraged balance sheet and excellent liquidity.

Alliance’s strong operating performance is demonstrated by a track record of consistently excellent results. In 2017, overall earnings stood at AED 48.2 million (USD 13.1 million), which translated into a 10.2% return on equity. Alliance’s earnings are supported by a solid underwriting performance, with life business generating a 14.6% gross profit margin and the non-life segment generating a combined ratio of 73.9% in 2017. Profitability was supplemented by earnings from the company’s conservative and stable investment portfolio, which yielded a 5.1% return.

Alliance is a mid-tier composite insurance company operating solely in the United Arab Emirates. A.M. Best considers the company’s underwriting portfolio to be well-balanced between life and general insurance products. Reinsurance dependence is high and, despite gradually increasing, premium retention on non-life business remained low in 2017 at 24% of GWP. Overall gross premiums declined marginally by 3.9% in 2017, to AED 289 million (USD 79 million), reflecting portfolio cleansing as well as the highly competitive insurance market in the UAE.

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.

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AMB# Company Name
078732 Alliance Insurance (PSC)