UAE: Management measures enable Abu Dhabi National Takaful to maintain strong underwriting
Source: Middle East Insurance Review | Dec 2022
Management actions implemented in Abu Dhabi National Takaful Company (ADNTC) since 2020, including the restructuring of the family takaful reinsurance programme and strategic diversification of the underwriting portfolio, are expected to contribute toward the maintenance of the insurer’s strong underwriting performance over the coming years, said AM Best.
ADNTC already has a track record of strong operating performance with a five-year (2017-2021) weighted average return-on-equity ratio of 17.3%, noted the ratings agency. ADNTC has a history of strong underwriting performance in both its general and family takaful portfolios.
Following challenging operating conditions in the UAE and structural changes made by ADNTC, which particularly affected the company’s family takaful business, underwriting returns contracted for a second consecutive year in 2021. The company returned a technical result of AED12.3m ($3.4m) in 2021, compared with AED15.2m in 2020, and AED70.3m in 2019 as calculated by AM Best.
The agency has affirmed the Financial Strength Rating of ‘A-’ (Excellent) and the Long-Term Issuer Credit Rating of ‘a-’ (Excellent) of ADNTC. The outlook of these credit ratings is ‘Stable’.
The ratings reflect ADNTC’s balance sheet strength, which the agency assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
The agency considers the takaful regulations in the UAE to be sufficiently strong, given the protection it provides to policyholders. ADNTC’s risk-adjusted capitalisation is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR) on a combined policyholder and shareholder fund basis. AM Best expects the company’s prospective risk-adjusted capitalisation to remain sufficient to support its strategic plans, including the recently announced proposed acquisition of a portfolio of unit-linked life insurance business from Dubai Islamic Insurance & Reinsurance Company (AMAN) which remains subject to regulatory approval. M