The Orient insurance group's prudent approach to risk selection and focus on profitability over top-line growth will sustain its very strong technical performance over the medium-term as the group navigates challenging market conditions, including high competition, according to AM Best.
Orient Insurance and its subsidiaries, Orient Takaful Insurance Company (Egypt) and Orient Takaful (UAE) are referred to collectively as Orient or the group, says the global credit rating agency.
The group has a track record of very strong operating profitability and reported a return-on-equity ratio of 15.3%, notes AM Best. It also has a net-net non-life combined ratio of 88.6% (both as calculated by AM Best) for 2024, despite the occurrence of large, unprecedented weather-related events impacting the market.
Ratings affirmed
AM Best has affirmed Orient’s Financial Strength Rating of ‘A‘(Excellent) and the Long-Term Issuer Credit Ratings of ‘a+’ (Excellent). The outlook of these credit ratings is ‘Stable’.
Balance sheet strength
The ratings reflect Orient’s balance sheet strength, which AM Best assesses as very strong, as well as its very strong operating performance, neutral business profile and appropriate enterprise risk management.
Orient’s balance sheet strength is underpinned by its consolidated risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The group’s balance sheet strength is supported by prudent reserving practices and its strong liquidity position.
Orient’s investment portfolio includes a material strategic equity holding that accounted for approximately 22% of total invested assets at year-end 2024 and introduces potential volatility in Orient’s capital and surplus, owing to fair value movements. The group’s remaining invested asset portfolio is conservative, with a weighting toward cash and fixed-term bank deposits. The balance sheet strength assessment also factors in Orient’s high dependence on reinsurance. Counterparty credit risk is partially mitigated by the use of a panel of financially sound reinsurance partners.
Business profile
Orient’s business profile assessment reflects the group’s continued leading market position in the UAE, where it ranks as the largest listed insurer by insurance services revenue (ISR), providing both conventional and takaful services. The group’s profile assessment reflects its strong brand, multichannel distribution network, and its affiliation with its ultimate parent, Al Futtaim Holding. Whilst Orient continues to grow its overseas operations and expand its geographical reach, its premium is largely sourced from the UAE, where approximately 90% of its ISR was generated in 2024.