FOR IMMEDIATE RELEASE
LONDON - NOVEMBER 29, 2023 11:11 AM (EST)
AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) of Dubai National Insurance & Reinsurance P.S.C. (DNI) (United Arab Emirates). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect DNI’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
DNI’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), which has been supported by capital and surplus growth that allow sufficient earnings retention after dividend distributions. AM Best expects the company to maintain a robust buffer in excess of the threshold required for a strongest BCAR assessment level. The assessment also reflects DNI’s low underwriting leverage, sufficient liquidity and history of prudent reserving practices. An offsetting factor is the company’s high dependence on reinsurance, evident by a retention ratio averaging 35% over five years. The associated counterparty credit risk is mitigated partially by the use of a panel of international reinsurance partners of sound credit quality.
DNI has a track record of strong operating performance, as demonstrated by a five-year (2018-2022) weighted average return-on-equity ratio of 8.2%. The balance of earnings is skewed toward investment income, which accounted for most of the company’s net profit in 2022. DNI’s underwriting results have been strong, demonstrated by a five-year (2018-2022) weighted average non-life combined ratio of 85.3%. In 2022 and the first three quarters of 2023, DNI reported a non-life combined ratios of 97.9% and 96.4%, respectively. Technical profitability has been impacted by challenging underwriting conditions, including pressure on premium rates for DNI’s core classes of business - motor and medical. Whilst the company’s earnings remain exposed to the high levels of competition in the UAE insurance market, AM Best expects DNI’s cross-cycle operating performance to remain strong, supported by its stringent underwriting and prudent risk selection.
DNI’s business profile assessment reflects its position as a mid-tier insurer in the UAE general insurance market. For year-end 2022, the company reported AED 419 million (USD 114 million) of gross written premium. DNI’s underwriting portfolio is geographically concentrated in the highly competitive UAE market. DNI has engaged in broadening its distribution platforms and has entered strategic partnerships to source underwriting growth.
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.