AM Best Upgrades Credit Ratings of Dubai Insurance Company (PSC)
May 17 2024 - 10:36AM
Business Wire
AM Best has upgraded the Financial Strength Rating to A
(Excellent) from A- (Excellent) and the Long-Term Issuer Credit
Rating to “a” (Excellent) from “a-” (Excellent) of Dubai Insurance
Company (PSC) (DIN) (United Arab Emirates). The outlook of these
Credit Ratings (ratings) has been revised to stable from
positive.
The ratings reflect DIN’s balance sheet strength, which AM Best
assesses as very strong, as well as its strong operating
performance, neutral business profile and appropriate enterprise
risk management.
The rating upgrades reflect the sustained enhancement of DIN’s
business profile through product diversification and profitable
growth. This is largely attributable to the successful execution of
recent business initiatives, including the Workers Protection
Program (WPP) and the Involuntary Loss of Employment (ILOE)
schemes, for which DIN is the consortium leader. The successful
roll-out of these products has diversified DIN’s business mix,
which historically was concentrated primarily in the motor and
medical segments in line with other domestic insurers, and has
consequently assisted DIN in materially growing its top line.
Moreover, DIN has enhanced its market position in a highly
competitive market without compromising technical profitability in
recent years. Overall, the company reported an increase in gross
written premiums of 91% to AED 2.8 billion in 2023, supported by
growth in most lines of business, including DIN’s non-consortium
products.
DIN’s balance sheet strength is underpinned by risk-adjusted
capitalisation at the strongest level, as measured by Best’s
Capital Adequacy Ratio (BCAR), which has been supported by strong
organic capital generation in recent years. This assessment factors
in the company’s sufficient liquidity and history of prudent
reserving. An offsetting factor in the balance sheet strength
assessment is DIN’s high dependence on reinsurance. The associated
counterparty credit risk is mitigated partially by the use of a
panel of financially sound reinsurance partners. The assessment
also considers the material share of equity holdings in DIN’s
investment portfolio and its exposure to fair value fluctuations,
which introduces the potential for volatility in capital and
surplus.
The company has a track record of strong operating performance
supported by robust underwriting results and steady investment
income. In 2023, under IFRS 17, DIN generated a net-net combined
ratio of 87.9% (as calculated by AM Best). The earnings of the WPP,
and consequently the ILOE product since 2023, have made a material
contribution to the company’s technical results, due to a low loss
experience and significant inward reinsurance commissions. Overall,
DIN’s portfolio maintained a strong underwriting performance in
2023, despite the challenging market conditions, including high
competition and significant pressure on premium rates.
This press release relates to Credit Ratings that have been
published on AM 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 AM Best’s Recent Rating
Activity web page. For additional information regarding the use and
limitations of Credit Rating opinions, please view Guide to Best’s
Credit Ratings. For information on the proper use of Best’s Credit
Ratings, Best’s Performance Assessments, Best’s Preliminary Credit
Assessments and AM Best press releases, please view Guide to Proper
Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specialising in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
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Todor Kitin, ACA Senior Financial Analyst +44
20 7397 0335 todor.kitin@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Jessica Botelho-Young, CA Associate Director,
Analytics +44 20 7397 0310
jessica.botelho-young@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 alslavin@ambest.com