UAE: A.M. Best affirms Emirates Retakaful ratings, revises outlook to positive
Source: Middle East Insurance Review | Jul 2015
A.M. Best has revised the outlook to positive from stable and affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb+” of Emirates Retakaful (EmiratesRE).
The revised outlook reflects EmiratesRE’s improving track record of technical earnings during a challenging market environment, when rates have been softening in its core markets. The ratings also factor in its strong risk-adjusted capitalisation, diversified business profile and adequate enterprise risk management.
EmiratesRE maintains a strong level of risk-adjusted capitalisation, benefiting from low business leverage and a conservative investment portfolio. The company is expected to maintain a sufficient capital buffer from strong earnings retention to support strategic initiatives. Furthermore, management factors risk-based capital requirements into its strategic forecasting and intends to retain capital in its policyholder fund in the medium term to support underwriting risks.
Positive rating movement could result from the gradual development of the company’s business profile over the medium to long term, coupled with sustaining strong underwriting performance. There will be negative rating pressure if the company is unable to maintain risk-adjusted capitalisation at an adequate level, or if profitability materially deteriorates.
“The positive outlook is an important step taking EmiratesRE forward to be a leading regional retakaful/ reinsurer,” said Mr Mohamed Hussein El Dishish, CEO of EmiratesRE. “This upgrade is the second positive move upward, from negative through stable to positive. It follows the rebranding, restructuring and relocation of the company, and reflects the success in maintaining growth and profitability in a relatively short span of time.”