News Middle East25 Apr 2021

UAE:Dubai Investments Co buys additional stake in National General Insurance

| 25 Apr 2021

Dubai Investments Company, a public joint stock company listed on the Dubai Financial Market and one of the leading investment companies in the Middle East, has announced the execution of a deal under which it acquired 21.53% of the shares of National General Insurance (NGI) from Emirates NBD.

On completion of the deal, the total ownership of Dubai Investments in the NGI reached 29.99% of the company's issued capital. This makes Dubai Investments the biggest shareholder in the insurer.

The deal falls within Dubai Investments' expansion plans that target the insurance sector in the UAE.

Mr Khalid bin Kalban, vice chairman and CEO of Dubai Investments, said, “This deal confirms the great interest that Dubai Investments places in strategic investments that contribute to the company’s entry into new commercial sectors, especially the UAE insurance sector, which has benefited from market stability and safety and regulatory frameworks”.
He said, "With the ability of this partnership to add a new set of benefits to customers, investors and stakeholders alike. We look forward to devoting our common experience to elevating the reputation of the National General Insurance Company to be one of the leading insurance companies in the region."

It is noteworthy that the NGI has been able, over the past 40 years, to gain and maintain the confidence of its customers as an insurance company listed on the Dubai Financial Market.

The company's diversified portfolio includes insurance products and solutions for individuals and companies such as vehicle insurance, health insurance, travel insurance, home insurance, personal accident insurance, life insurance, group health insurance, vehicle fleet insurance, property insurance, marine insurance, engineering insurance, credit insurance, energy insurance, liability insurance, general accident insurance, and other classes of business.

Ratings

In a report on 15 April, AM Best affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of NGI. The outlook of these credit ratings is stable.

The ratings reflect NGI’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

NGI’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio. AM Best expects prospective risk-adjusted capitalisation to remain at the strongest level, supported by good earnings retention and controlled growth. The assessment also factors in the company’s good level of liquidity and low underwriting leverage.

Offsetting rating factors include NGI’s high dependence on reinsurance and exposure to volatile equity and real estate assets. The balance sheet strength assessment incorporates the UAE’s low economic risk, and moderate political and financial system risk.

Financial performance

NGI has demonstrated good underwriting performance across key non-life lines of business, with a five-year average combined ratio of 90.9%, as calculated by AM Best. NGI generated net income for 2020 of AED44.4m (2019: AED15.1m), driven by strong underwriting performance in the company’s core medical and motor lines of business. Operating performance is further supported by stable investment income, with a five-year average investment return of 2.5%, excluding gains.

AM Best says that NGI’s business profile is limited, due in part to its concentration to the highly competitive UAE market. The company has a well-established profile in the UAE insurance market as a mid-tier player. NGI has a strong presence in the local motor and medical lines of business and is one of only 12 insurers licensed to participate in the Dubai Health Authority’s mandatory health insurance scheme. AM Best expects the company to grow modestly over the short-to-medium term, with a focus remaining on achieving bottomline profitability and a balanced portfolio.

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