UAE: National Takaful (Watania) receives bb+ rating
Source: Middle East Insurance Review | Jun 2018
National Takaful Company (Watania) has received a long-term issuer credit rating (long-term ICR) of ‘bb+’ and a financial strength rating (FSR) of ‘B’ (Fair) from A.M. Best.
The positive ratings reflect Watania’s balance sheet strength, which the ratings agency described as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management. Watania has been successful in executing its business strategy following a change in senior management in 2016. The takaful operator has since embarked on strategic initiatives to stabilise its operations, adopting stricter underwriting controls and tighter claims management. Underwriting performance has improved considerably following the cancellation of loss-making accounts and cost efficiencies achieved through synergies with Al Madina Insurance Company SAOG.
Watania’s conservative investment portfolio produced an investment yield of 3.2%, enabling the company to achieve a good level of profitability (AED7.6m) in 2017. Watania has improved its shareholder equity over the past year and is continuing to strengthen its shareholder equity mainly through internal capital generation, with any dividend payments contingent on profitability levels remaining in line with the 2017 results.
The takaful operator has a limited business profile within its domestic market, writing about AED271m in gross contribution revenue in 2017. Reduction of business volumes from poor performing accounts have been replenished through price increases and new business generated through a wider distribution network.
A.M. Best expects the insurer to continue reaping the rewards of its strategy over the longer term although there will be challenges to achieve scale and profitability in a market that remains highly competitive. M
AED1 = $0.27