2013-08-22 17:09:01 -
A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of Abu Dhabi National Insurance Company P.S.C. (ADNIC) (United Arab Emirates). The outlook for both ratings remains stable.
The ratings reflect ADNIC’s strong risk-adjusted capitalisation, established position within the United Arab Emirates (UAE) and sound financial performance.
ADNIC’s risk-adjusted capitalisation remains strong despite a gradual decline in recent years, as capital requirements outpaced internal capital generation. This was driven by ADNIC’s strategic decision to increase retention levels across most business lines, while growing at a faster pace than the market. Risk-adjusted capitalisation is sufficiently strong to absorb a projected annual growth of approximately 15%, over the next two years. ADNIC
maintains a leading position within the UAE market with a diversified portfolio across non-life and medical healthcare business segments.
ADNIC’s overall earnings remain sound, reaching AED 145 million (USD 40 million) in 2012, compared to AED 158 million (USD 43 million) in 2011.
Earnings in 2012 were negatively impacted by an increase in doubtful debt provisions and an adjustment in unearned premium reserves to comply with the draft UAE insurance regulation and the International Financial Reporting Standards (IFRS). ADNIC’s performance is expected to remain sound despite further adjustments relating to IFRS, which will negatively affect the company’s performance over the next two years.
Downward rating pressure could occur from a material reduction in ADNIC’s financial performance or risk-adjusted capitalisation. Upward rating movement is unlikely in the near term.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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