LONDON--(BUSINESS WIRE)--First set of data in third graph of release dated February 23, 2017 should read: "AED 885 million (USD 241 million)" [instead of "AED 926 million (USD 252 million)"]. First sentence, fourth graph should read: "... a total of 23 companies generated an operating profit in 2016..." (instead of "... a total of 24 companies generated an operating profit in 2016...").
The corrected release reads:
A.M. BEST SPECIAL REPORT: NATIONAL INSURERS IN THE UNITED ARAB EMIRATES BACK IN THE BLACK
After an extremely challenging year of underwriting and investment losses for many market participants during 2015, the United Arab Emirates (UAE) insurance market has swung back into the black in 2016.
The market has endured regulatory upheaval in the past year as it seeks greater financial stability, and economic volatility mainly arising from the low oil price environment. However, analysis of preliminary disclosures of UAE national insurers listed on the Abu Dhabi Securities Exchange and Dubai Financial Market show a notable improvement in earnings, coupled with solid premium growth.
A.M. Best’s findings, published in a new Best’s Special Report, titled, “National Insurers in the United Arab Emirates Back in the Black,” state aggregate results for the market in 2016 showed a healthy profit of AED 885 million (USD 241 million), in stark contrast to the market loss of AED 145 million (USD 39 million) in 2015.
Mahesh Mistry, senior director of analytics, said: “Of the 29 listed insurers in the UAE, a total of 23 companies generated an operating profit in 2016, compared with 16 in 2015, indicating that although the market as whole has returned to profitability, individual insurers too have experienced a recovery. Whilst the results show a shift toward greater market discipline, A.M. Best notes that the weak market performance for 2015 was severely impacted by investment losses and regulatory driven reserve strengthening.”
The research adds growth remained strong, with listed insurers in the UAE generating combined gross written premiums of AED 18.8 billion (USD 5.1 billion) during 2016, a 9.9% increase from 2015. A key driver of premium growth was the medical line of business, which has benefited from the introduction of a mandatory health insurance scheme introduced by the Dubai Health Authority.
A.M. Best expects the market to remain extremely competitive in 2017, with regulatory pressures. Thomas Bateman, associate financial analyst, said: “The Insurance Authority has targeted further improvements to the regulatory environment and plans to be more active in the market during the coming years. The UAE market remains an attractive proposition with growth opportunities, although competition is as intense as ever and pricing pressures are expected to stay. Companies will need to improve the quality of service and offer new and innovative products to maintain their market share; nevertheless, the market is considered to be well-positioned for a strong 2017.”
Over the short term, A.M. Best expects the credit quality of rated insurers to remain robust despite the changing regulatory landscape. As the market moves further in line with the regulatory requirements, financial stability is expected to improve. A key driver for prospective credit quality will be an insurer’s ability to generate a track record of solid earnings in a highly competitive market, coupled with its capability to prudently manage capital.
To access a complimentary copy of this special report/briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=258896.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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