A.M. Best Affirms Credit Ratings of Emirates Insurance Company P.S.C.

Business Wire

LONDON--(BUSINESS WIRE)-- A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Emirates Insurance Company P.S.C. (EIC) (United Arab Emirates). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect EIC’s balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).

The company’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), was assessed at the strongest level at year-end 2017. Capital requirements are largely driven by asset risk arising from the company’s concentrated investment portfolio weighted toward domestic equities. However, EIC has a sufficient capital buffer to absorb volatility arising from these assets. In addition, EIC has a moderate reliance on reinsurers, as the company retains approximately 46% of its premium; however, credit risk is reduced by the company’s reinsurance panel, which is considered to be of good credit quality.

EIC reported profit before tax of AED 110 million for 2017, which is equivalent to a return on equity of 10.3%. Furthermore, there has generally been a good balance of earnings between technical and investment income. EIC has a track record of strong operating and technical profitability, highlighted by a five-year average (2013-2017) combined ratio of 89%, which has demonstrated low volatility during this period. The company’s underwriting returns are driven primarily by its domestic primary operations, and in particular, motor, which benefited from the introduction of pricing controls by the Insurance Authority (IA) at the beginning of 2017.

EIC maintains a reasonable market position in the domestic market and the company’s profile is enhanced via geographical diversification from its specialist reinsurance arm, Emirates Insurance Company International (EIC Intl). In 2017, EIC Intl ceased underwriting international marine business, due to volatile performance from this portion of the business and expectations of poor prospective market conditions. Despite this, the company’s core domestic portfolio continues to perform well and EIC achieved overall premium growth of 5.4% during 2017, reporting gross written premiums of AED 1.1 billion.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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 A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

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A.M. Best

Thomas Bateman

Financial Analyst

+44 20 7397 0329

thomas.bateman@ambest.com

or

Mahesh Mistry

Senior Director, Analytics

+44 20 7397 0325

mahesh.mistry@ambest.com

or

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

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Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

james.peavy@ambest.com