LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Orient Insurance PJSC (Orient) (United Arab Emirates). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Orient’s track record of excellent technical performance, very strong risk-adjusted capitalisation and domestic business profile, as well as the company’s robust enterprise risk management (ERM).
Orient has consistently reported excellent technical results over the past five years. The company’s non-life operation generated an exceptional five-year average combined ratio of 69% (2012 to 2016). Orient’s life business also reported good profits in each of the past five years. Excellent underwriting performance has been maintained despite prevailing competitive market conditions in the United Arab Emirates (UAE), with significant pressure on premium rates across most lines of business. Orient’s prudent approach to risk selection and focus on profitability over top-line growth is expected to support continued strong technical performance.
Orient’s risk-adjusted capitalisation remained very strong in 2016. The company’s capital requirements, as measured by Best’s Capital Adequacy Ratio (BCAR), continue to be driven by a single strategic equity holding, which accounted for approximately 37% of total invested assets at year-end 2016. This investment created an element of volatility in Orient’s risk-adjusted capitalisation in 2016 and in the first quarter of 2017, owing to a decline in its share price. However, A.M. Best believes that the company has a more-than-sufficient buffer in capital adequacy to absorb fluctuations in the market value of this holding.
Orient maintains a strong business profile and a leading position in the UAE market. The company’s premium base surpassed AED 2.6 billion (USD 728 million) in 2016, ranking it as the second-largest listed insurer in the UAE. Orient’s profile continues to benefit from its multi-channel distribution network and its affiliation with the Al-Futtaim group. Going forward, A.M. Best expects the company to increase its penetration of the UAE’s life segment and grow its regional footprint in line with the Al-Futtaim group’s expansion where feasible.
Orient’s ERM capability saw notable improvement over the past three years. Strengthening in the identification and quantification of key risks, as well as improvements in the company’s approach to controlling and mitigating these exposures has been a focus point of Orient’s management team.
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