Best’s News & Research Service - September 30, 2024 09:11 AM (EDT)
AM Best Affirms Credit Ratings of Abu Dhabi National Insurance Company P.J.S.C.
- September 30, 2024 09:11 AM (EDT)
//BestWire// - AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Abu Dhabi National Insurance Company P.J.S.C. (ADNIC) (United Arab Emirates) [UAE]. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect ADNIC’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
ADNIC’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), at the strongest level. AM Best expects the company’s risk-adjusted capitalisation to remain comfortably at the strongest level, underpinned by sufficient organic capital generation to support business plans. The company’s balance sheet strength assessment also benefits from its excellent liquidity position and good financial flexibility. An offsetting factor in the balance sheet strength assessment is ADNIC’s dependence on reinsurance to write large commercial risks; however, the associated credit risk is mitigated partially by the use of a diversified reinsurance panel of sound financial strength.
ADNIC has a track record of strong operating performance, evidenced by return on equity exceeding 12% in all of the last five years (2019-2023). The company’s earnings benefit from robust non-life underwriting profits, the result of good underwriting discipline and investment returns. In 2023, ADNIC reported a post-tax profit of AED 401.2 million (USD 109.2 million), which includes investment income of AED 206.7 million. Despite challenging market conditions and exposure to weather related events in the UAE, ADNIC reported a strong post-tax-profit of AED 205.2 million over the first six months of 2024 (June 2023: AED 204.4 million).
ADNIC holds a market leading position in the UAE, where it ranks as the second-largest insurance company by insurance revenue, among listed insurers. In 2023, the company reported insurance revenue of AED 4.64 billion (USD 1.26 billion) (2022: AED 4.66 billion). ADNIC writes a well-diversified portfolio by line of business, although the portfolio is weighted to domestic medical business on a net basis. During 2024, ADNIC expanded its geographical reach through the acquisition of a 51% shareholding of Allianz Saudi Fransi Cooperative Insurance Company (Saudi Arabia). ADNIC has reported consolidated financial results since the date of acquisition on 17th April 2024 and has reported significant growth in consolidated insurance revenue to AED 3.3 million for the first six months of 2024 (June 2023: AED 2.1 million).
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.