A.M. Best Assigns Ratings to Al Ittihad Al Watani (L’Union Nationale)

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has assigned a financial strength rating of B+ (Good) and an issuer credit rating of “bbb-” to Al Ittihad Al Watani (L’Union Nationale) Societe Generale d’Assurances du Proche Orient sal (Al Ittihad) (Lebanon). The outlook for both ratings is stable.

The ratings of Al Ittihad reflect its improving capital position, robust underwriting performance and good business profile. Offsetting factors include its weak investment strategy and underdeveloped risk management framework.

Al Ittihad is a Lebanese-based insurer with branches in the United Arab Emirates and Kuwait, concentrating mainly on motor and medical business. A.M. Best expects Al Ittihad to continue to grow within its key markets, between 10%-15% in each of the next two years, with gross premiums written expected to be in excess of LBP 110 billion (USD 75 million).

In A.M. Best’s opinion, Al Ittihad’s capital position is supportive of the current ratings, given the lower asset risk following the disposal of significant private investments and full earnings retention. In A.M. Best’s view, prospective risk-adjusted capitalisation is largely dependent on Al Ittihad’s future investment strategy. It is important for Al Ittihad to adopt prudent investment management to ensure capital remains strong. Additionally, Al Ittihad is supported by a solid reinsurance programme, with low catastrophe risk due to regional diversification. Furthermore, in A.M. Best’s opinion Al Ittihad needs to strengthen its risk management framework to ensure risks are monitored and controlled effectively.

Al Ittihad’s financial performance has been good, with pretax profits of USD 5 million in 2008, derived from robust underwriting performance. The company has experienced solid underwriting results for both life and non life business, with technical profits of USD 5.85 million in 2008. A.M. Best expects Al Ittihad’s combined ratio to remain below 90% over the next two years. Conversely, Al Ittihad’s investment performance has been weak (with returns consistently below 4%), given its historic concentration in private equity and real estate assets.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Co.
Analysts
Mahesh Mistry, +(44) 20-7626-6264
mahesh.mistry@ambest.com
or
Anandi Nangy-Kotecha, +(44) 20-7626-6264
anandi.nangy-kotecha@ambest.com
or
Public Relations
Jim Peavy, +(1) 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, +(1) 908-439-2200, ext. 5378
rachelle.morrow@ambest.com

Source: A.M. Best Co.