Orient Insurance has captured a substantial 35% of the overall profits of the insurance market in the UAE, with a net profit of AED314 million (US$85.5 million) last year, according to S&P Global Ratings.
Orient recorded GWP of AED2,673 million in 2016, maintaining its position as the second-largest insurer in the UAE. Premium growth was about 15%, outpacing the 10% market average of the 29 listed insurers in the country.
The insurer’s performance was largely driven by its life and medical portfolios, S&P noted. It is one of the “Participating Insurers” under the Dubai Health Authority scheme, which has concluded its third phase in the first quarter of 2017.
Furthermore, to broaden its customer base and diversify its product offering, the insurer set up Orient UNB Takaful, a joint venture with Abu Dhabi-based Union National Bank that offers Shariah-compliant products.
Orient recorded a net combined ratio of 76% in 2016 (2015: 72%). This compares with the market average of about 99%.
Its underwriting performance in the past two years is slightly worse than its five-year average combined ratio of 69%. This is due to some fire losses in high-rise towers in the UAE. The most significant one was at The Address Hotel. Orient’s net exposure was about AED38 million, compared with a gross loss of AED1,285 million.
In a report dated 15 May 2017, S&P affirmed its ‘A’ long-term counterparty credit and insurer financial strength ratings. The outlook is stable.
At end-2016, Orient’s total shareholders’ equity was around AED2,557 million. Under S&P’s risk-based capital model, the insurer continues to have a capital adequacy in excess of the agency’s ‘AAA’ benchmark.
Orient is 100%-owned by Al Futtaim Group (AF), a large, family-owned conglomerate. S&P regards AF as an investment holding company and consequently assesses the insurer on a standalone basis.
The stable outlook reflects the rating agency’s expectation that Orient will retain its position as a top-tier insurer in the UAE with above-market-average profitability and maintain a capital adequacy in excess of the ‘AAA’ benchmark. M