2014-03-13 17:24:02 -
A.M. Best has affirmed the financial strength rating of B+ (Good) and issuer credit rating of "bbb-" of National Takaful Company (Watania) PJSC (Watania) (United Arab Emirates). The outlook for both ratings remains stable.
The ratings reflect Watania’s strong prospective risk-adjusted capitalisation and its developing market profile. An offsetting rating factor is the execution risk associated with Watania’s expansion plan in a highly competitive domestic insurance market.
Watania benefits from strong current and prospective risk-adjusted capitalisation with sufficient capital to support its strategic plan.
The company’s capital position benefits from a conservative investment strategy, focused on fixed income securities and low underwriting leverage. Counter-party credit risk arising from high reinsurance cessions is supported by a strong reinsurance panel. In 2013, Watania’s overall
earnings were in line with expectations, reporting a marginal operating loss of AED 2.4 million (USD 0.7 million). Underwriting performance was affected by high claims experience on motor and property business lines, but this was offset by improved investment returns.
Watania remains a small company in the highly competitive UAE insurance market. The challenge of achieving a stronger market profile, while writing profitable business, represents a significant level of execution risk.
The rating is well placed at the current level. Upward or downward rating movement will be tied to Watania’s ability to successfully execute its business plan.
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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