AM Best Affirms Credit Ratings of Insurance House P.S.C.

LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Insurance House P.S.C. (IH) (United Arab Emirates). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect IH’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).

IH’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). In addition, the company maintains a panel of financially sound reinsurers and a good level of liquidity to support its insurance obligations. IH also is considered to have good financial flexibility, most recently demonstrated through the issuance of AED 15 million (approximately USD 4.1 million) of perpetual subordinated bonds in 2019. Offsetting balance sheet strength factors include the company’s small overall capital base and material exposure to higher risk asset classes, which exposes its capital position to potential volatility.

IH has demonstrated an adequate operating performance track record in recent years, following execution of strategic initiatives to stabilise its operations in light of historically volatile performance in 2016 and prior years. The adoption of stricter underwriting controls and tighter claims management, and a change of senior management in 2016, has resulted in the company generating underwriting profits in each year since 2017 (combined ratio of 98.0% in 2020), compared with significant underwriting losses prior to this (combined ratio of 122.5% in 2016). The company’s investment portfolio continues to contribute positively to overall profitability, producing an investment yield (including gains) of 3.5% in 2020. AM Best expects IH’s operating performance metrics to remain robust over the coming years, as the company executes its business plan.

IH has a modest share of the UAE non-life market, and wrote AED 217.4 million (USD 59.2 million) in gross written premium in 2020. In line with peers operating in the UAE, the company writes predominantly motor and medical insurance business on a net basis. AM Best expects IH to continue to grow its underwriting portfolio in line with its business plan, although market conditions remain challenging given the high level of competition in the company’s target segments.

AM Best views IH’s ERM as marginal. In recent years, the company has begun formalising its risk management framework, and strengthening risk management capabilities to more closely align with its risk profile. AM Best expects IH to continue to implement and enhance its ERM framework, as it continues with its strategic transformation of the company over the coming years.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.