LONDON--(BUSINESS WIRE)--A.M. Best has commented that the period for resolution of the under review with negative implications status on the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Abu Dhabi National Insurance Company P.S.C. (ADNIC) (United Arab Emirates) has been extended pending the execution of an issuance of mandatory convertible bonds.
On Aug. 27, 2015, the ratings of ADNIC were placed under review with negative implications following deterioration in the company’s risk-adjusted capitalisation and operating performance. At that point, ADNIC had begun to undertake a capital enhancement initiative, with management anticipating that capital adequacy would be strengthened by year-end 2015. Despite management’s endeavors to adhere to this timeframe, the proposed issuance is the first of its kind in the Middle East insurance market and has taken longer to design and obtain approval for than initially anticipated.
ADNIC is expected to issue AED 390 million of short-duration mandatory convertible bonds, with the instrument automatically converting to common equity at the end of the term. Whilst ADNIC has received approval from its Board of Directors, the company has yet to obtain shareholder approval. The company is anticipated to call for a Shareholders’ General Assembly Meeting in January, and subject to the necessary approvals, management expects to execute the transaction by the end of first-quarter 2016.
In addition to the proposed capital enhancement, the extension of the under review status will enable A.M. Best to fully assess the company’s rating fundamentals following a review of full-year 2015 financial performance, as well as consider the measures taken by management to strengthen its enterprise risk management.
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