LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a” of Orient Insurance Company (PJSC) (Orient) (United Arab Emirates). The outlook for both ratings remains stable.
The ratings reflect Orient’s strong risk-adjusted capitalisation, solid business profile within the United Arab Emirates (UAE) and excellent technical performance. Offsetting factors include Orient's concentrated investment portfolio and need for an enhanced enterprise risk management framework.
Orient’s risk-adjusted capitalisation remains superior as a result of a strong track record of profitability and profit retention, a low level of risk retention and a panel of highly rated reinsurers. The company’s capital position strengthened in 2013 following fair value gains on its investment in the Commercial Bank of Dubai. Orient continues to generate robust operating performance, producing after-tax profit of AED 240 million (USD 65 million) in 2013. Profitability is driven by the company’s excellent technical performance with the combined ratio maintained below 70%.
Orient holds a leading position in the UAE insurance market, writing approximately AED 1.6 billion (USD 435 million) of premium revenue in 2013. The expansion of the company’s profile is expected to be driven by organic growth and the recent introduction of mandatory health care in Dubai. Further diversification in Orient’s business profile is anticipated following the regional expansion of its parent’s franchise.
Orient has material exposure to a single equity investment, which represents approximately one-third of the company’s asset allocation. While this exposure can create volatility in Orient’s capital position, the company has sufficient capital and surplus to absorb this strategic investment. However, the concentrated investment portfolio, coupled with Orient’s international expansion, will require an enhanced enterprise risk management framework.
Negative rating pressure could result from a material reduction in risk-adjusted capitalisation or prolonged weakening in operating performance. The strengthening of the enterprise risk management framework and a successful international expansion may positively impact Orient’s ratings.
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.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
This rating announcement has been issued by A.M. Best Europe – Rating Services Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
