UAE: Emirates Retakaful firm's fate hangs in the balance
Source: Middle East Insurance Review | Jan 2018
Emirates Retakaful has announced changes in the senior management team and that it is looking at a potential sale of the company.
The company’s CEO and CFO have resigned and will be leaving the company after their six-month notice periods, said A.M. Best in a report in which it downgraded the Long-Term Issuer Credit Rating to “bbb” from “bbb+” and affirmed the Financial Strength Rating of B++ (Good) of the retakaful company. Concurrently, the ratings agency has placed these Credit Ratings (ratings) under review with negative implications. These ratings followed the announcement by Emirates Retakaful.
“The ‘under review with negative implications’ status reflects uncertainty regarding the future shareholding structure, management team and strategy of Emirates Retakaful. The downgrade reflects the company’s failure to meet A.M. Best’s expectations, in addition to Emirates Retakaful’s declining business profile,” the agency said.
It also said that the retakaful company continues to operate a well-diversified portfolio geographically and by line of business. However, the company lacks scale and has struggled with growth in what remains a soft global reinsurance market. Emirates Retakaful reported a significant contribution adjustment at year-end 2016, which gave rise to concern over the company’s internal control environment. Gross written contributions are expected at about US$70 million for 2017.
In 2016, Emirates Retakaful made a $36-million write-off from gross written contributions. The adjustment reflects significantly reduced contributions received compared to booked estimates, the majority of which relates to prior underwriting years. Prior to the contribution adjustment, the company reported gross written contributions of $64 million in 2016.
The company was incorporated in 2013 and is headquartered in Dubai. M