LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of National General Insurance Company (P.J.S.C.) (NGI) (United Arab Emirates). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect NGI’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
NGI’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects prospective risk-adjusted capitalisation to remain at the strongest level, supported by good earnings retention and controlled growth. The assessment also factors in the company’s good level of liquidity and low underwriting leverage. Offsetting rating factors include NGI’s high dependence on reinsurance and exposure to volatile equity and real estate assets. The balance sheet strength assessment incorporates the UAE’s low economic risk, and moderate political and financial system risk.
The company has achieved a five-year (2016-2020) weighted average return-on-equity ratio of 6.6%, which has been supported by robust and stable underwriting results from its non-life portfolio. NGI has demonstrated good underwriting performance across key non-life lines of business, with a five-year average combined ratio of 90.9%, as calculated by AM Best. NGI generated net income for 2020 of AED 44.4 million (2019: AED 15.1 million), driven by strong underwriting performance in the company’s core medical and motor lines of business. Operating performance is further supported by stable investment income, with a five-year average investment return of 2.5%, excluding gains.
NGI’s business profile is limited, due in part to its concentration to the highly competitive UAE market. The company has a well-established profile in the UAE insurance market as a mid-tier player. NGI has a strong presence in the local motor and medical lines of business and is one of only 12 insurers licensed to participate in the Dubai Health Authority’s mandatory health insurance scheme. AM Best expects the company to grow modestly over the short-to-medium term, with a focus remaining on achieving bottom line profitability and a balanced portfolio.
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