A.M. Best Revises Outlooks to Stable for Al-Sagr National Insurance Company P.S.C.
The revised outlooks reflect alleviated pressure on ASNIC applied by its parent, Gulf General Investment Co. (P.S.C.) (GGICO), an investment company based in the
In A.M. Best’s view, there is greater independence for ASNIC following a reduction in ownership from GGICO to below 50% and independence of the board of directors, with GGICO having no outright control over decision making. GGICO appoints one out of five directors on ASNIC’s board, and therefore does not maintain outright control. Despite the difficulties experienced by GGICO over the past few years, pressure has not been placed on ASNIC to upstream dividends to its parent company. The introduction of solvency regulations by the Insurance Authority provides an added level of protection to the company. Additionally, the lack of outright control and shareholders limited dividend requirements have alleviated the pressure on ASNIC.
ASNIC’s non-life technical performance remains weak, with the company reporting a technical loss of AED 13.2 million in 2016 compared with a prior-year profit of AED 3.3 million. Technical profitability continued to reflect the impact of the ongoing intense competitive conditions within the company’s target markets, and was exacerbated by the company’s high underwriting concentration in the challenging motor and medical segments. However, results in 2017 indicate an improvement in technical profitability.
ASNIC produced overall earnings in 2016 of AED 20.7 million (
Receivables arising from insurance and reinsurance contracts accounted for over half of gross written premium in 2016, with a material amount of these outstanding receivables maintaining a duration of over 365 days. Whilst
Despite the above factors, ASNIC’s risk-adjusted capitalisation remains strong, due to its low level of insurance leverage. ASNIC maintains a modest franchise within the
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Rishwinder Grewal
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