Best’s News & Research Service - March 31, 2022 12:19 PM (EDT)
AM Best Withdraws Credit Ratings of Noor Takaful General PJSC
- March 31, 2022 12:19 PM (EDT)
London //BestWire// - AM Best has placed under review with developing implications the Financial Strength Rating (FSR) of B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bb” (Fair) of Noor Takaful General PJSC (NTG) (United Arab Emirates). Concurrently, AM Best has withdrawn these Credit Ratings (ratings) as the company has requested to no longer participate in AM Best’s interactive rating process.
The ratings reflect NTG’s balance sheet strength, which AM Best assesses 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 was at the strongest level as at year-end 2020, as measured by Best’s Capital Adequacy Ratio (BCAR). Whilst AM Best expects NTG’s prospective risk-adjusted capitalisation to remain at the strongest level, it is expected to trend downward over the short to medium term, driven by increased underwriting risk and the dividend requirements of its parent, Dar Al Takaful PJSC (DAT). The balance sheet strength assessment also considers NTG’s conservative investment portfolio and its appropriate reinsurance programme placed with a panel of financially sound reinsurance partners.
NTG has a track record of adequate operating performance following a management change in 2016 that resulted in stricter underwriting discipline. NTG generated a combined ratio of 89.4% in 2020, which compares with a five-year weighted average of 99.0% (2016-2020). Unaudited 2021 financial information shows continued positive net earnings, following the first full year of the integration of motor and general insurance portfolios previously underwritten by NTG’s parent, DAT.
NTG’s limited business profile assessment reflects its market position and portfolio concentration within the UAE’s non-life takaful insurance market. The business combination with DAT has contributed to greater scale in the highly competitive UAE market, although NTG remains a mid-tier player.
These ratings have been placed under review with developing implications following the announcement on 3 March 2022 that DAT, NTG’s parent group, has reached an agreement with National Takaful Company (Watania) PJSC on a proposed merger between both companies. The transaction, which is subject to shareholder and regulatory approvals, is expected to complete during the third quarter of 2022. The under review with developing implications status reflects the potential impact of the merger to NTG’s prospective credit fundamentals, and the strategic direction and consolidated financial strength of its parent group, DAT.
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.