LONDON–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-” of Dubai
Insurance Company (PSC) (DIC) (United Arab Emirates). The outlook of
these Credit Ratings (ratings) is stable.
The ratings reflect DIC’s balance sheet strength, which AM Best
categorises as very strong, as well as its strong operating performance,
limited business profile and appropriate enterprise risk management.
DIC’s balance sheet strength is assessed as very strong, underpinned by
risk-adjusted capitalisation at the strongest level, with Best’s Capital
Adequacy Ratio (BCAR) scores comfortably in excess of 50% at the 99.6%
confidence level. The company’s ability to retain earnings, strong
liquidity, and prudent reserving that incorporates buffers over the
actuarial best estimate, further support the balance sheet strength. An
offsetting rating factor is the heightened volatility in capital and
surplus caused by movements in the fair value of DIC’s equity holdings,
although the company maintains an adequate capital buffer to absorb
these fluctuations. The balance sheet strength assessment also factors
in DIC’s high dependence on reinsurance, as evidenced by a retention
ratio of approximately 21% in 2018. The associated counter-party risk is
mitigated partially by the use of a strong reinsurance panel.
DIC has enhanced its market position successfully in a highly
competitive market without compromising technical profitability. In
2018, DIC grew its gross written premium (GWP) by circa 12% to AED 531.9
million benefiting from the introduction of the new Ministry of Human
Resources and Emiratisation (MOHRE) insurance product, which came in
force in October 2018, for which DIC is the consortium leader.
Historically, DIC’s business mix was concentrated primarily in motor and
medical lines of business; however, the introduction of the MOHRE
product has led to additional diversification in the company’s product
offering. Going forward, the MOHRE product is expected to account for
approximately 40% of GWP, with medical and motor business remaining
material lines.
The company has a track record of solid operating performance as
demonstrated by an excellent five-year (2014-2018) weighted average
combined ratio of 75.9%. DIC reported a technical profit of AED 43.2
million in 2018, compared with AED 28.6 million in 2017. The
introduction of the MOHRE product has contributed positively to the
company’s technical earnings. DIC’s performance benefits from higher
inward commissions as part of its role as the consortium’s leader. AM
Best expects prospective underwriting performance to remain strong,
although exposure to equities could introduce some volatility in total
comprehensive income.
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 Understanding
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 rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
Contacts
Jessica Botelho-Young, CA
Senior Financial Analyst
+44
20 7626 6264, ext. 310
[email protected]
Mahesh Mistry
Senior Director, Analytics
+44
20 7397 0325
[email protected]
Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159
[email protected]
Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644
[email protected]
