A.M. Best Places Ratings of Abu Dhabi National Insurance Company P.S.C Under Review With Negative Implications
The rating action follows a further decline in ADNIC’s risk-adjusted capitalisation and operating performance, emanating from significant reserve strengthening during the first half of 2015 and poor underwriting performance on core commercial business lines. The under review status reflects the company’s proactive approach to improve underwriting and to restore its capital to a level supportive of the ratings by year-end 2015.
Following a change in senior management at the end of 2014, ADNIC carried out a comprehensive review of reserving practices and claims handling within the company. This resulted in ADNIC undertaking further significant reserve strengthening, during the first half of 2015, in addition to that encountered in 2014. As a result of the action undertaken by management to correct legacy issues, there has been a material deterioration in risk-adjusted capitalisation, liquidity and technical performance over the past year.
Shareholders’ equity as at
Furthermore, concerns remain with regards to the company’s technical performance, with 2015 expected to result in an underwriting loss for the year. Reflecting the weak earnings over the past year, ADNIC’s five-year average combined ratio is likely to rise above 100%. The company has already taken corrective measures to improve the motor and medical portfolios by enforcing stricter underwriting guidelines and controls, in addition to shedding loss-making accounts. While it is expected that ADNIC will return to technical profitability in 2016, the company will be challenged to produce robust results given the fierce competition in the
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Aneela Mather-Khan, CA, +(44) 20 7397 0329
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